Allied Property & Casualty Insurance Co. v. Good
2010 Ind. App. LEXIS 2215
Ind. Ct. App.2010Background
- Allied challenges judgment favoring Goods; dispositive issue is whether Allied is entitled to summary judgment due to Linda Good's misrepresentation on the insurance application.
- Linda completed a homeowners insurance application July 2002; the policy was in her name only.
- In 2003 a fire destroyed the Goods' home; Allied investigated but did not pay or deny the claim during the investigation.
- Allied sought summary judgment arguing the contract was void ab initio because Linda lied about past cancellation history on the application.
- The trial court denied summary judgment; a trial in 2009 led to directed verdicts for the Goods and a damages award to Linda.
- The Indiana Court of Appeals reversed, holding Linda’s misrepresentation was material and that Allied would not have issued the policy if the truth were known, remanding for judgment in Allied's favor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether misrepresentation on the application voids the policy ab initio | Good argues misinterpretation of 'ever' defeats void ab initio | Good's misrepresentation about past cancellations is a material breach voiding policy | Misrepresentation materials; policy void ab initio; judgment for Allied affirmed (in part) |
| Interpretation of the word 'ever' on the cancellation question | Ever refers only to the current policyholder with the current company | Ever refers to any past or current insurance history, not limited to current company | The majority adopts broad 'ever' meaning; ambiguity resolved against insured |
| Materiality standard for misrepresentation on an insurance application | Affidavit proves materiality as insurer would charge higher premium or not issue policy | Materiality is a question of fact; insurer could rely on representations without further investigation | Materiality is a fact question; here the evidence shows no genuine issue on materiality under Guzorek |
| Role of insurer's reliance and duty to investigate past losses | Allied relied on Linda's statements in issuing the policy | No duty to investigate beyond what is stated in the application unless warranted | Allied's reliance and lack of further inquiry do not negate materiality; however, materiality remains contested in dissent |
Key Cases Cited
- Guzorek v. Colonial Penn Ins. Co., 690 N.E.2d 664 (Ind. 1997) (two approaches to materiality; material misrepresentation voids or partially rescinds)
- Dugan v. Mittal Steel USA, Inc., 929 N.E.2d 184 (Ind. 2010) (summary judgment standard; de novo review for questions of law)
- Beam v. Wausau Ins. Co., 765 N.E.2d 524 (Ind.2002) (insurance contract language interpreted by plain meaning when unambiguous)
- Home Ins. Co. v. Cavin, 162 Miss. 1, 137 So. 490 (Miss. 1931) (ambiguity absent; 'ever' meaning clarified in policy language)
- Prudential Prop. and Cas. Co. v. Cole, 586 S.W.2d 433 (Mo.Ct.App. 1979) (misrepresentation in insurance context; materiality depends on risk)
- Graphic Arts Mut. Ins. Co. v. Pritchett, 220 Ga.App. 430, 469 S.E.2d 199 (Ga.App. 1995) (misrepresentation about past cancellations can be material)