The insurer brought a declaratory judgment claiming that there was no policy coverage under a fraud and concealment exclusion, based on an inaccurate statement made at an examination under oath. The insurer asserted that the exclusion applied irrespective of the insured’s state of mind in making a false statement, i.e., false statement = no coverage independent of intent. The policy language apparently embodied this position.
The court still rejected it, finding that the weight of case law requires some level of intent, with the applicable test being that to void a policy for a false statement the insurer must show: “(1) the representation was false; (2) the insured knew it to be false when made or acted in bad faith; and (3) the representation was material to the risk being insured.” The court stated that Pennsylvania law “does not allow an insurer to rescind an insurance policy because of innocent mistakes by the insured, even if those mistakes involved misrepresentations of material facts.”
As the insured’s state of mind remained at issue, judgment on the pleadings for the insurer could not be granted.
Date of Decision: July 7, 2016
Cincinnati Ins. Co. v. Drenocky, No. 15-762, 2016 U.S. Dist. LEXIS 87711 (M.D. Pa. July 7, 2016) (Conner, J.)