Montgomery Mutual Insurance Company v. Riddle, 266 Va. 539

Summary

The Supreme Court of Virginia held that an insurer seeking to void an insurance policy under Code § 38.2-309 must clearly prove both that an application statement or omission was untrue and that reliance on it was material to the insurer’s decision to undertake the risk and issue the policy. The court affirmed the trial court’s judgment because Montgomery Mutual failed to prove the required reliance by its agent, who reviewed the application for completeness and form rather than substance.

Holdings

1. An insurer seeking to void a policy under Code § 38.2-309 for alleged material omissions or misrepresentations must prove by clear proof both that the statement or omission was untrue and that the insurer's reliance on it was material to the decision to undertake the risk and issue the policy. Proof of falsity alone is insufficient.
2. Montgomery Mutual failed to prove the necessary reliance because its agent, whose apparent authority bound the policy, reviewed the applications only for completeness and proper form and not for the substance of the answers.

Questions Presented

1. Whether Code § 38.2-309 requires an insurer seeking to void a policy based on material misrepresentations or omissions in an insurance application to prove actual reliance on those statements.
2. Whether the evidence supported the trial court's finding that Montgomery Mutual's agent did not rely on the alleged misrepresentations or omissions.

Disposition

affirmed