Our insured, an auto dealer, purchased a used vehicle and then sold it. The buyer drove the car for several years, and when he attempted to trade it in for a newer model, he was told that the odometer had been tampered with; it seems the car had quite a bit more mileage on it than the customer was led to believe when he bought the car from our insured. Of course, the customer brought the car back to our insured and was given a refund of his purchase price.

Efforts by the insured to recover the financial loss from the original seller were futile, so the insured presented a claim to his insurer based on false pretense coverage. The insurer denied coverage, contending that false pretense coverage is only applicable if the insured has lost possession of the covered auto. Our insured did not lose possession of the car but he did suffer a financial loss, and he did buy the car under false pretenses. Wouldn't such a loss be covered by the false pretense endorsement?

New Jersey Subscriber