Problem
A broker submits an application for automobile insurance to an insurance company on behalf of a client. The broker is unaware that although her client is the registered owner of the vehicle to be insured, her client's adult son is the actual owner and operator of the vehicle. This means that the client has provided false information on the insurance application.
• You are the underwriter on this risk and it comes to your attention that the insured's son is the owner and operator of the insured vehicle. What issues should you consider when you discover the actual facts about the ownership and operation of the insured automobile?
• Before the underwriter discovers that the insured has provided false information on her application, a claim is reported. The actual owner of the car lost control of his vehicle on the highway and drove his vehicle into a ditch. When the insurer becomes aware of the false information that was provided, what options do they have? What option should they take? Why?