Indiana Supreme Court: Seriously, Don’t Lie on Your Policy Application

On Tuesday, in Dodd v. American Family Mutual Insurance Company, the Indiana Supreme Court affirmed that misrepresentations on an application can void an insurance policy.

We first reported on this case back in November 2011. (See our previous post here.) Here’s a brief summary:

Michael 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. Mr. Dodd had been living in his girlfriend’s house, which had just burned down, but Mr. Dodd didn’t include any of that info in his policy application. A few years later, Dodd’s new house catches on fire. The insurer finds out about the other fire and denies coverage, arguing the policy was void.

The trial court granted summary judgment in favor of the insurer on the grounds that Mr. Dodd’s misrepresentations voided the policy. 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. (The insurer had interpleaded the premiums with the trial court.)

The Indiana Supreme Court affirmed the trial court’s summary judgment ruling and held that the insurer wasn’t required to tender a return of the premiums in order to rescind the policy because the amount of premiums to be returned–a little over $2,000–was less than what the insurer had already paid out for a hail damage claim before the fire. That meant that the insurer not only won the case, it also got its money back.

Nice burn, Supreme Court.

That’s gotta burn…

About Brian Jones

I represent clients in all aspects of business litigation, but focus my practice on complex litigation and arbitration matters concerning insurance and reinsurance, antitrust, class actions, securities, real estate disputes, and contract matters. I am the co-chair of the Bose McKinney & Evans Insurance Group. I was listed in the 2017 and 2016 "Best Lawyers in America" for Insurance Coverage and named a "Rising Star" in Insurance Coverage by Super Lawyers in Indiana in 2014. I was also named a "Rising Star" in Business Litigation by Super Lawyers in Indiana in 2013 and 2012, and a 2010 “Rising Star” in Business Litigation in Texas. I am a member of the State Bars of Indiana and Texas, the Defense Research Institute, a former member of the Pro Bono College of the State Bar of Texas, and I am licensed to practice before all state courts in Indiana and Texas, as well as all federal courts in Indiana, the Northern, Western, and Southern Districts of Texas, the Northern District of Illinois, and the United States Courts of Appeals for the Fifth, Seventh, and Eleventh Circuits. I received my bachelor’s degree, cum laude, in political science and my master’s degree in teaching from Trinity University, where I was elected to Phi Beta Kappa. I received my doctor of jurisprudence degree from the University of Texas School of Law, where I was the Director of Communications for the Legal Research Board and a member of the Phi Delta Phi Honor Society. Before attending law school, I taught high school geography, government and economics in San Antonio, Texas.
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3 Responses to Indiana Supreme Court: Seriously, Don’t Lie on Your Policy Application

  1. Alas, the insurer did not get everything it paid out. Their claim payment was $5.500 and they were effrectively allowed to offset the $2,079.80 return oremium amount. With the policy voided, would not the insurer have a valid claim to recover the difference? If the policy is void ab initio, claim payments should have to be returned by the insured. Not a lot of case law in this area, and as a practical matter the insurer would likely not press a claim for a little less than $3,500.

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