Summary Judgment Win Voids Policy for Misrepresentations in Application

Chartwell attorneys Karen Karabinos and Kevin Kelly recently obtained summary judgment on behalf of their insurance carrier client in a lawsuit brought by an insured entity seeking more than $5 million in damages, along with claims for bad faith.

The carrier had issued a businessowners policy to the insured. Just eleven days after the policy was bound, the insured sustained a fire loss. During its investigation, the carrier discovered that the insured’s representative had provided inaccurate responses to underwriting questions on the application. Specifically, the insured had sustained four prior losses, had previously been sued, and had been non-renewed by its prior carrier. The carrier confirmed it would not have issued the policy had these facts been disclosed.

Karen and Kevin filed a declaratory judgment action on behalf of the carrier, followed by a motion for summary judgment. The U.S. District Court for the Northern District of Georgia granted the motion, holding that “the undisputed record indicates that the insured’s misrepresentations on its application were material to the carrier’s decision to provide coverage.” The court further noted that the representative’s own testimony in both his Examination Under Oath and deposition confirmed that the insured was uninsured at the time of its application due to multiple prior claims and that it had been turned down by other carriers.

Although the parties disputed whether the representative expressly denied prior losses, the court emphasized there was no dispute that he signed the application attesting there were no prior losses or non-renewals. Rejecting the insured’s arguments that the application questions were ambiguous, the court issued a declaratory judgment allowing the carrier to void the policy and deny the claim. The court also denied the insured’s cross-motion for summary judgment on its breach of contract and bad faith claims.

This ruling represents a significant victory for Chartwell’s client and emphasizes the importance of accurate disclosures in the underwriting process.