You’d think people would learn. If you make a misrepresentation on your policy application, bad things usually happen.
Take the case of Michael Dodd, resident of Frankfort, Indiana. Mr. Dodd applied for a homeowner’s policy for a house he would be building and said that his girlfriend would also live in the house with him. Thing is, he had been living in his girlfriend’s house, which had just burned down. Which the new one was going to replace. But Mr. Dodd didn’t include any of that info in his application, so he gets the policy he applied for.
It should come as no surprise, then, that a few years later, the new house catches on fire. The insurer finds out about the other fire and denies coverage, arguing the policy was void ab initio. The Indiana Court of Appeals agreed that the insured made material misrepresentations, but disagreed that the policy was void at the outset. Instead, it was voidable at the insurer’s option, which requires a timely return of premiums paid. Since the record wasn’t clear on that point, it remanded the case for further proceedings.
In any event, the lesson here is clear and one that should oft-repeated: If in doubt, write it out. A disclosure that is. (OK, so I’m not a great jingle writer…)