When Is A Misrepresentation In An Insurance Application Not Material

The above question is usually not easy to answer.  Aledo insurance lawyers need to read a 1976 case from the Waco Court of Appeals.  The opinion is styled, Westchester Fire Insurance Co. v. English.

Posing as husband and wife when in fact they were not married, a couple purchased a house and at closing, also purchased home owners insurance coverage.  The house burned down three months later.  After the fire, the Westchester learned for the first time that the couple were not married.

The policy provides in part that it ‘shall be void if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance, or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.’

Westchester took the position that the misrepresentation regarding the couples marriage status was a misrepresentation that was material to the loss and that the policy would not have issued had the truth been known by Westchester.

A lawsuit resulted and the case went to trial.  There were many issues at trial not discussed here but ultimately Westchester was excused from paying on the policy.

Westchester contends that the evidence conclusively establishes that Hickey’s representations to Logan that he and Mrs. Meadows owned the house and contents as husband and wife and that they would occupy and use the house as such (which the jury found were falsely made by Hickey with intent to deceive) were material to the risk and were relied upon by Westchester; or, alternatively, that the jury’s answers to Issues 10 and 14, in which it failed to find the representations were material to the risk, are against the great weight and preponderance of the evidence.

A misrepresentation in an application for a policy is not material to the risk of insurance unless it actually induces the insurance company to assume the risk.  It is the carrier’s burden to establish this fact as a defense.

Ken Tomlinson, an underwriter employed by Westchester, testified to several reasons why Westchester would not have issued the policy to Hickey if it had known the true relationship between Hickey and Mrs. Meadows. Logan testified he ‘couldn’t say exactly’ what Westchester would have Done.  Westchester has not offered to return any premiums.

This court ruled that the misrepresentation regarding the marital status was not material to the risk assumed by Westchester.

Because this case went to trial and there were many questions put to the jury, this opinion along with the other insurance related issues in the case, make the opinion a must read for insurance lawyers.