This case addresses insurance contract rescission/reformation for alleged knowing material misrepresentations, among other legal issues.
Philadelphia Federal Judge Kearney observes that insurers may rescind their policies “’if (1) the application contained a misrepresentation, (2) the misrepresentation was material to the risk being insured, and (3) the insured knew that the representation was false when made, or the insured made the representation in bad faith.’”
Judge Kearney finds that there was no misrepresentation in the insurance application itself, and rescission was not warranted on that ground. An open issue remained, however, as to whether the insured’s agent made material misrepresentations to the insurer as to the scope of the risk. He wholly rejected the notion that an agent’s misrepresentations could not be attributed to the insured/principal.
Thus, summary judgment was not granted as factual issues remained for the jury to decide concerning the agent’s representations.
Date of Decision: March 14, 2022
AIX Specialty Insurance Company v. American Legion Department of Pennsylvania, U.S. District Court Eastern District of Pennsylvania No. CV 21-2338, 2022 WL 767834 (E.D. Pa. Mar. 14, 2022) (Kearney, J.)