We have a large internment camp. It is called Texas. I can hear a Texan in the office across the hall coughing his head off right now. He talks about automatic weapons, drives a huge truck like an angry nut case, and will not put on a mask or get the jab.
The auto insurance company will not pay. The parents are on the hook. The policy is void for at least two reasons. 1) Insurance does not cover an auto used during the commission of a crime whether it is an assault or a bank robbery. 2) Material Misrepresentation. The engine modification increases liability and the insurer was not notified of the unlawful modification under Texas Transp Code Section 547.605, which also voided the Mfg warrantee on the truck.
Wellllll thats actually incorrect on both counts. I'm the tech/knowledge lead for a classic/exotic/modified specialty auto insurance program and I have been involved at the regulatory level (filing the applications with the states for approval, and the insurance program overall including the policy forms, which in some cases I have helped write) and the individual legal level to determine if misrep applies.
First, on commission of a crime: No such provision exists in the standard Texas Personal Auto Policy form or Amendatory endorsement. Its also not in the industry-standard policy that makes up the core language in most other states. Here's the reason why: Such a provision could leave injured 3rd parties with no way to recover expenses for severe bodily injury. Years ago a regulator told me a similar provision "creates an uninsured motorist" which is generally forbidden. There is however a specific exclusion for fraudulent acts associated with any accident or loss.
Does that mean it exists in no policy anywhere? No. 'manuscript' policies exist that were written entirely by the insurance company rather than using the standard wording as their basis. Such policies are - in today's world - scrutinized microscopically. I did see a policy many years ago that excluded criminal acts and specifically mentioned a drunk driving exclusion. But a policy like that would never fly today. I'll skip the details on that ;-).. As a further caveat, while I reviewed the standard policy and TX Amendatory, there is an Amendatory Endorsement for every state (which describes the amendments to the standard policy form required by each state's unique regulations) and such a thing might be hiding in one of them. But honestly based on experience, I really doubt it. It goes against the protection of the populace from some butthead who runs amok and regulators tend to universally hold that as a primary guiding principle.
Material Misrep: The "material" part of that is often mistaken for meaning that something material was misrepresented. Unless Texas is unique (which it is in many ways in the insurance industry), the "material" part means
the standard for insurance claims: "material to the accident at hand". So... did the lie pertain to something that either caused the accident or somehow contributed to it? If yes to either then thats a yes to material misrep. If the smoke obscured the driver's vision for example and caused him to unknowingly run someone over. On the other hand if the vehicle had some other mod that was unreported, like I dunno wheelie bars and a parachute (I've seen that in real life) then that mod will not trigger any issues with this incident since it had no materiality to said incident.
BUT... for misrep to be material, there has to be something misrepresented, and just the existence of the contributing/causing mod does not mean failure to volunteer its existence creates misrep. Generally, an insurance application has a question on it that says "is the vehicle modified in any way?" If the applicant (likely Daddy) said no to this, then bam thats a form of misrepresentation. However if the mod did not exist at the time of the insurance application, then there was no misrep. BUT if the application contains a stipulation that all future mods will be volunteered to the ins. co. for evaluation then a somewhat murky case for misrep exists - mostly because there are legal issues associated with trying to say that to an applicant.
There is a famous (in insurance) case where a lifted truck ran over someone's foot (Mercury v. Markham), and caused a whole lot of pain/suffering/lawsuits. Mercury Insurance said no way because of the material misrep of the applicant saying 'no' to the modified? question on the app. they rescinded the policy as if it never existed and returned the premium saying they never would have covered him if they had known about the mod. But the applicant said "hey wait my agent said don't worry about that question' and also 'the agent is an agent of the company so screw you you have to cover me'. This caused a lot of discussion (and appeals) as to whether the agent was an agent of the company or an agent for the consumer, along with a lot of other stuff. Point being... its never cut and dried.
