PRESENT: All the Justices 

MONTGOMERY MUTUAL INSURANCE COMPANY 

 OPINION BY 

v. Record No. 021271 JUSTICE DONALD W. LEMONS 

 

 October 31, 2003 

JEFFREY RIDDLE, ET AL. 

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 

Marcus D. Williams, Judge 

 In this appeal, we consider whether Va. Code § 38.2-309 

requires proof of actual reliance by an insurance company on 

material misrepresentations made in an application for 

insurance before a policy of insurance can be declared void. 

I. Facts and Proceedings 

 Jeffrey S. Riddle (“Riddle”) was a subcontractor with 

Pennington Construction. Pennington Construction required him 

to obtain general liability insurance and workers’ 

compensation insurance. Riddle contacted Chesapeake Bay 

Insurance Agency, Inc. (“Chesapeake”) to obtain insurance. 

Chesapeake sought the assistance of Southern Maryland 

Insurance, Inc. (“Southern Maryland”) in obtaining a policy 

for Riddle. 

Southern Maryland was owned and operated by Ken Wyvill. 

Wyvill was a limited agent of Montgomery Mutual Insurance 

Company (“Montgomery Mutual”). At trial, Wyvill testified 

that he had authority to bind Montgomery Mutual to extend 

insurance coverage to applicants although he was contradicted 
by another employee of Montgomery Mutual. When Wyvill 

received a request from Chesapeake to obtain an insurance 

policy for Riddle, he arranged for Riddle to apply to Rockwood 

Insurance (“Rockwood”). Riddle completed a Rockwood 

application which Wyvill reviewed and submitted to Rockwood. 

After Rockwood rejected Riddle’s application, Wyvill suggested 

to Chesapeake that Riddle submit an application to Montgomery 

Mutual. 

Chesapeake responded by requesting that Wyvill proceed 

with obtaining a policy for Riddle from Montgomery Mutual. 

Chesapeake asked that the policy with Montgomery Mutual be 

bound effective April 20, 2000. Riddle completed Montgomery 

Mutual’s application form and submitted payment for the 

insurance premium. Wyvill sent the application to Montgomery 

Mutual with a notation that insurance coverage was “bound” 

effective “4/20/00.” 

When asked whether he reviewed the two applications with 

the intent to bind coverage, Wyvill testified that he neither 

acted nor intended to bind coverage for Riddle at any time and 

that he “was just reviewing them to make sure all the boxes 

were checked that were supposed to be checked and the 

information that was supposed to be in there was in there.” 

According to Wyvill, he merely checked Riddle’s applications 

for completeness and proper format. 

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On April 29, 2000, an employee of Riddle was electrocuted 

on the job. On May 2, 2000, Riddle submitted a claim to 

Montgomery Mutual through Wyvill. Montgomery Mutual received 

Riddle’s application for insurance the following day. On May 

4, 2000, the employee died and, six days later, Montgomery 

Mutual denied insurance coverage. 

Montgomery Mutual filed an action for declaratory 

judgment to determine coverage. The trial court found that 

Wyvill, through his apparent authority as an agent of 

Montgomery Mutual, orally bound coverage to Riddle beginning 

April 20th and that Wyvill had not “relied on” alleged 

misrepresentations found in Riddle’s application in making the 

decision to bind coverage. On appeal, Montgomery Mutual 

argues that the trial court erred in holding that it must 

prove that it or its agent relied on the alleged material 

misrepresentations made by Riddle in order to void the policy. 

Alternatively, it argues that, even if a showing of reliance 

is necessary, the trial court’s finding that Wyvill did not 

rely on the veracity of Riddle’s application was erroneous. 

Montgomery Mutual does not appeal the holding of the trial 

court that the policy was bound by the apparent authority of 

Wyvill. 

II. Analysis 

 Code § 38.2-309 provides: 

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All statements, declarations and descriptions 

in any application for an insurance policy or 

for the reinstatement of an insurance policy 

shall be deemed representations and not 

warranties. No statement in an application or 

in any affidavit made before or after loss 

under the policy shall bar a recovery upon a 

policy of insurance unless it is clearly proved 

that such answer or statement was material to 

the risk when assumed and was untrue. 

 We had occasion to interpret this statute in Commercial 

Underwriters Insurance Co. v. Hunt & Calderone, P.C., 261 Va. 

38, 42 540 S.E.2d 491, 493 (2001) (citations omitted), when we 

held that: 

We have construed Code § 38.2-309 and its 

predecessors to require an insurance company 

contesting a claim on the basis of an insured’s 

alleged misrepresentation to show, by clear 

proof, two facts: (1) that the statement on the 

application was untrue; and (2) that the 

insurance company’s reliance on the false 

statement was material to the company’s 

decision to undertake the risk and issue the 

policy. To prove the falsity is not 

sufficient; the company must prove clearly that 

truthful answers would have reasonably 

influenced the company’s decision to issue the 

policy. 

Montgomery Mutual maintains that our statements about reliance 

are dicta because they were unnecessary to the resolution of 

the case and, further, that we were wrong in our 

interpretation of the statute. While Montgomery Mutual may be 

right about whether reliance was an issue in Commercial 

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Underwriters, we reaffirm the correctness of our 

interpretation of the statute’s requirements. 

 As a threshold matter, we recognize the intimate 

conceptual relationship between reliance and materiality. It 

is clear that the General Assembly only wanted matters 

“material to the risk” to be at issue in the voiding of a 

policy of insurance. “Material” is defined as “[o]f such a 

nature that knowledge of the item would affect a person’s 

decision-making process.” Black’s Law Dictionary 991 (7th ed. 

1999). Obviously, if there is no reliance upon a statement or 

omission, it could not have affected the decision-making 

process; consequently, it could not be material. Accordingly, 

we reiterate that when an insurance carrier seeks to void a 

policy for alleged material omissions or misrepresentations 

pursuant to Code § 38.2-309, the insurer must show, by clear 

proof, two facts: (1) that the statement or omission on the 

application was untrue; and (2) that the insurance company’s 

reliance on the false statement or omission was material to 

the company’s decision to undertake the risk and issue the 

policy. To prove the falsity is not sufficient; the insurer 

must prove clearly that truthful answers would have reasonably 

influenced the company’s decision to issue the policy. 

 The trial court held that Wyvill had the apparent 

authority to bind the policy in question and Montgomery Mutual 

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is bound by that holding because no error was assigned to it. 

At trial, Wyvill testified on behalf of Montgomery Mutual that 

he did not intend to bind the policy and made it quite clear 

that he did not review the applications for substance. 

Instead, he reviewed the applications to assure that the 

applications were complete and in proper form. 

 Montgomery Mutual is now circumscribed by the posture of 

the case on appeal. It seeks to examine the substance of the 

answers to questions on the applications. But the trial court 

held that the policy was bound through the apparent authority 

of Wyvill, who reviewed the applications for their form and 

not their substance. Therefore, Montgomery Mutual has not 

proved the necessary reliance to prevail in its attempt to 

void the policy. Upon review of the record we cannot say that 

the trial court was plainly wrong or without evidence to 

support its judgment that Wyvill did not rely on the 

statements or omissions in the policy applications. 

 Accordingly, we will affirm the judgment of the trial 

court. 

Affirmed. 

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