American Service Insurance v. United Automobile Insurance
947 N.E.2d 382
Ill. App. Ct.2011Background
- ASI appeals a trial court grant of UAIC's summary judgment and denial of ASI's, seeking declaration that UAIC owed no duty after rescission.
- UAIC rescinded Baker's policy effective April 9, 2003 due to a material misrepresentation in the application concerning household drivers, specifically Devin.
- Baker failed to disclose Devin as a driver; Devin began operating the vehicle after the application, including after he obtained a learner's permit.
- UAIC amended declarations to reflect two drivers, but kept Devin unlisted; Baker testified Devin was driving and had a 'blue slip' license status.
- February 2, 2004 accident as to Devin triggered the rescission; March 15, 2004 rescission was effected, premiums returned, and suit followed involving ASI and UAIC.
- ISSUES include whether misrepresentation was material, whether UAIC waived rescission, and whether rescission fell within the one-year limitation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Devin's nondisclosure a material misrepresentation | ASI: omission not material since Devin wasn't an operator at application time | UAIC: Devin was a driver and material risk; omission increases loss exposure | Material misrepresentation found; rescission upheld |
| Was UAIC's rescission timely under section 154 | ASI: one-year limit not strictly applied; not promptly rescinded | UAIC: rescission within one year; timely under statute | Rescission within the one-year period; timely |
| Did UAIC waive its right to rescind by delaying after learning Devin drove | ASI: delay evidenced waiver | UAIC: policy terms and notice clause preserved rights; no waiver | No waiver found; rights reserved |
| Did Baker's misrepresentation justify voiding the policy | ASI: misrepresentation not intentional or material | UAIC: misrepresentation was material and intentional regarding risk | Misrepresentation material; policy void and rescinded |
Key Cases Cited
- Ratliff v. Safeway Insurance Co., 257 Ill.App.3d 281 (Ill. App. 1993) (material misrepresentation can be material to risk; disclosure required)
- Coregis Ins. Co. v., 355 Ill.App.3d 156 (Ill. App. 2004) (statutory promptness for rescission under §154; one-year limit)
- Government Employees Insurance Co. v. Dennis, 90 Ill.App.2d 356 (Ill. App. 1967) (underwriting information relevant to risk for policy issuance)
- Safeway Insurance Co. v. Duran, 74 Ill.App.3d 846 (Ill. App. 1979) (driver age and household composition affect risk assessment)
- Garde v. Country Life Insurance Co., 147 Ill.App.3d 1023 (Ill. App. 1986) (duty to disclose information in underwriting; materiality standards)