Is a Falsified Car Title Covered Under the False Pretense Endorsement?

• By: The Big "I" Virtual University
• June 26, 2026

A used car dealer with a garage policy bought a pickup truck with a falsified title. The dealer ended up paying the customer $40,000 too much for a previously totaled vehicle. The customer is being prosecuted by the Department of Transportation, but the car dealer wants to file and collect on its ISO false pretense coverage endorsement.

Q: Does the false pretense coverage endorsement provide coverage for this situation?

Response 1: I’m guessing that somebody sold a vehicle to the insured outright—no trade or related transaction—and the dealer paid the price for an undamaged vehicle. After the money and title changed hands and the seller departed, the dealer discovered that the vehicle had suffered serious previous damage, which had caused a previous insurance company to declare it a total loss. Because of this prior loss, the vehicle is worth $40,000 less than what the dealer paid for it. Is that the case?

If that’s what happened, there’s no coverage. The coverage form is triggered by two events: parting with a vehicle through a trick or fraud—not the case here—or acquiring a vehicle from a seller who didn’t have a valid title. Based on the above assumption that the seller had a title to the vehicle, this latter trigger doesn’t apply either.

When you think about it, you can probably see why the coverage doesn’t apply to a loss involving a faulty estimate of a vehicle’s value. A buyer might pay a premium price for a vehicle brought in by a retiree, for example. After the sale, the buyer learns that while it was owned by that person, it was driven 100% of the time by her drag-racing grandson. Insurance companies would be reluctant to pay for a faulty judgment like that, whether the seller lied or simply forgot the vehicle’s true history.

Response 2: Unfortunately, I don’t see any coverage under the garage policy or false pretense endorsement. There is no physical damage to the vehicle. The endorsement gives these coverage conditions:

False Pretense Coverage

We will pay for loss of covered property caused by or resulting from:

• • Someone causing you to voluntarily part with title to, possession of or custody of covered property by a scheme, trick, device or false pretense; or
  • Your acquiring of such covered property from a seller who did not have legal title.

The first part applies to your client parting with covered property as defined in the policy. The second part provides coverage from a seller who did not have legal title. It sounds like the seller did have legal title, but it was intentionally falsified.

You could try to make an argument that the title was not legal because it was falsified, but that would be a stretch.

Response 3: It does not look like false pretense applies to this situation. The first coverage condition does not apply because the insured did not part with a covered auto due to false pretense, trick or device, or conversion. The second condition does not apply—yet—because there is no evidence to suggest that the seller was not the legal title holder, even though the sale to the insured was accomplished with an altered title.

If the altered title was also a falsified title that named someone other than the actual titled owner, then the false pretense coverage could apply. If the seller of the auto was the actual owner who altered the title to obscure the fact that the car had been totaled, then false pretense would not apply.

Response 4: This might be a legal question. If the title was falsified, was it a legal title? Was it a salvage title? If the seller had title but falsified portions of it, then lawyers could debate if it was “legal title.” Some might say it was not a “legal title” given the falsification. Others might opine the opposite.

Turn it in and let the carrier decide.

This question was originally submitted by an agent through the Big “I” Virtual University’s (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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