Auto Dealers Coverage and False Pretenses

With any insurance policy, wording is key. Every policy has definitions of key terms so the insured and the insurer have a clear understanding of what is meant by certain terms. Lately the editors have received a number of questions surrounding terms or concepts that do not have a definition in the auto dealers policy language. This can make the policy language confusing, so that coverage or lack of coverage is not totally clear.

 False pretenses is one of those terms. False pretenses is an exclusion that appears in the Auto Dealers Coverage form CA 00 25, and it is not a defined term. The concept is described as loss to a covered auto that results from someone causing the insured to voluntarily part with an auto by trick or scheme or under false pretenses, or from a seller without legal title to the vehicle. Voluntarily parting with an auto is easily understood; the insured lets the auto out of his custody willingly and not under any sort of coercion or duress. Trick or scheme or false pretense is where it gets confusing. As always with policy language that is not defined, we turn to the dictionary to define these terms. Merriam Webster Online defines trick as a crafty procedure or practice meant to deceive or defraud. A scheme is defined as a plan or program of action, especially a craft or secret one. False pretense must be broken apart as it is a phrase. False is defined as not genuine, or intentionally untrue, adjusted or made so as to deceive, and pretense is defined as a claim made or implied, especially one not supported by fact; professed rather than real intention or purpose; an inadequate or insincere attempt to attain a certain condition or quality. Therefore, a false pretense is a claim presented as true that is deliberately untrue, and is meant to deceive. False pretenses are how the person gets the insured to voluntarily let go of property without realizing that they’re being taken.