courtroom upholds insuer's request to rescind policies of insured who misrepresented house, where cars garaged

courtroom upholds insuer's request to rescind policies of insured who misrepresented house, where cars garaged

 The Dairlyland insurance company sought to rescind policies based on what it contended have been fraudulent misrepresentations. (AP photograph/Mel Evans)

This story is reprinted with permission from FC&S prison, the business’s best complete digital aid designed for insurance coverage law specialists. seek advice from the web site to subscribe.

A federal district court in Maine has dominated that an insurance enterprise may rescind automobile coverage guidelines it issued to an insured who represented that he lived in Maine and would storage his vehicles there, when he really lived in, and garaged his automobiles in, Massachusetts.

The Case

McArthur Sullivan submitted an software to Dairyland assurance enterprise for a Maine vehicle coverage wherein he mentioned that he became a resident of Wales, Maine, and that he mainly garaged the motors he sought to insure in Wales, Maine. really, although, Mr. Sullivan primarily resided and garaged the vehicles he sought to insure in the Commonwealth of Massachusetts, a fact he didn't reveal in the utility.

Dairyland issued varied Maine automobile coverage policies to Mr. Sullivan.

Thereafter, the insurer sought to rescind the policies in keeping with what it contended have been Mr. Sullivan’s fraudulent misrepresentations.

toward that end, it filed a lawsuit, and moved for summary judgment.

The Dairyland policies

Mr. Sullivan’s software contained the following statement:

it's a criminal offense to knowingly supply false, incomplete or deceptive advice to an insurance enterprise for the aim of defrauding the business. Penalties may also encompass imprisonment, fines, or a denial of assurance advantages. (Emphasis introduced.)

The guidelines issued via Dairyland cited that:

if you have made any false commentary on your application, this policy may additionally no longer give any insurance.

The policies additionally stated that:

This coverage is issued via us in reliance upon the statements which you made in your application for insurance.... We rely upon you to give us with accurate tips.... if you have made any misrepresentations for your application or when because of this asked, this policy may additionally not deliver any insurance. (Emphasis ignored.)

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additionally, amendments to the policies stated that:

if you misrepresent any truth or circumstance that impacts the eligibility of a chance, contributes to a loss, we reserve the right to disclaim insurance. This additionally applies if the misrepresentation outcomes in a top class lessen than that which might were charged if authentic and comprehensive representations had been made. (Emphasis unnoticed.) 

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Maine legislation

Maine legislations gives:

Representations in purposes

All statements and descriptions in any software for insurance or for an annuity contract, via or in behalf of the insured or annuitant, are deemed to be representations and never warranties. Misrepresentations, omissions, concealment of records and wrong statements may additionally no longer evade a recovery beneath the coverage or contract unless both: 

1. Fraudulent; or

2. fabric both to the acceptance of the chance, or to the hazard assumed with the aid of the insurer, such that the insurer in first rate faith would both now not have issued the coverage or contract, or do not have issued it at the same top rate fee, or won't have issued assurance in as large an quantity, or should not have offered coverage with appreciate to the hazard ensuing in the loss, if the true statistics had been made primary to the insurer as required both via the software for the policy or contract or otherwise.

24 M.R.S.A. § 2411. 

The District court’s resolution

The district court docket granted Dairyland’s motion.

In its choice, the district courtroom explained that, to set up a declare for fraudulent misrepresentation, Dairyland had to produce “clear and convincing facts”:

of a false illustration through Mr. Sullivan;

of a cloth fact;

with abilities or reckless disregard of its falsity;

for the intention of inducing Dairyland to act in reliance; and

exact reliance by using Dairlyand. 

The district court docket talked about that Mr. Sullivan had misrepresented where he lived and where he garaged his vehicles “with skills of their falsity and for the purpose of securing an vehicle insurance policy at a reduce top rate cost than he would had been charged if he had disclosed that the vehicles had been garaged in Massachusetts.” in addition, the district courtroom persisted, he knew that Dairyland became relying on the assistance he presented to determine no matter if to accept the insurance risk and to set the top rate fee of his coverage.

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The district court additionally decided that the guidance requested through Dairyland and offered by means of Mr. Sullivan changed into “fabric” to Dairyland’s decision to settle for the chance that it turned into insuring. The district court mentioned that Dairyland did “not situation very own vehicle coverage guidelines to people essentially living in or basically garaging their vehicles in Massachusetts,” and labeled as an “unacceptable risk” drivers who didn't stay within the score state at least 10 months per yr.

in accordance with the district court, the proof supported the conclusion that, without Mr. Sullivan’s misrepresentations concerning his basic home and the foremost region of his automobiles, Dairyland do not have issued him a private automobile insurance plan.

The district court concluded, hence, that Dairyland was entitled to rescind the policies it had issued to Mr. Sullivan and that it did not need to shelter or indemnify him under the policies.

The case is Dairyland Ins. Co. v. Sullivan, No. 2:sixteen-cv-00050-JDL (D. Maine March three, 2017).

Steven A. Meyerowitz, Esq., is the director of FC&S prison, the editor-in-chief of the assurance insurance law report, and the founder and president of Meyerowitz Communications Inc. e mail him at smeyerowitz@meyerowitzcommunications.com.

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