Dallas Fort Worth Insurance Lawyer Blog
A misrepresentation in an insurance application is grounds for denial of a claim but it is not necessarily a win for the insurance company. This issue is discussed in a recent opinion from the Texas 14th Court of Appeals. The opinion is styled, Jose Palma v. Allied Trust Insurance Co.
This case was a summary judgment win for the insurance company but there is a clear distinction with this case and the vast majority of cases regarding misrepresentations.
Palma purchased an insurance policy for his home with appellee. During the policy period, there was a fire at Palma’s home. Palma submitted an insurance claim under the policy. Allied investigated and found that Palma had a prior conviction for insurance fraud that was not disclosed on his application for
insurance. Allied sent Palma a letter in which it rescinded the policy stating that Palma’s misrepresentation rendered the policy void and that it would not have insured Palma had Palma disclosed his prior insurance fraud conviction.
Palma filed suit and Allied answered and asserted the defense that it rescinded the policy because of Palma’s “material misrepresentation” among other affirmative defenses.
Allied filed a traditional motion for summary judgment arguing that “there is no genuine issue of any material fact that the policy issued to Palma is void due to Palma’s material misrepresentation in the policy application that he was never convicted of insurance fraud.” Allied went on to argue that it
conclusively established that: (1) the policy contained a “concealment or fraud provision” which voided the insurance contract; (2) Palma made a material misrepresentation in his Policy application; (3) Allied relied and acted upon Palma’s material misrepresentation; and (4) Palma’s policy is void due to his
material misrepresentation. In support of these elements, Allied submitted five exhibits: (1) the policy application; (2) the policy; (3) the “DocuSign certification of completion;” (4) correspondence with insurance agent; and (5) Palma’s criminal conviction for insurance fraud. In its motion, Allied stated that it “rescinded the policy due to the material misrepresentation,” that Palma “made the material
misrepresentation in his application with the intention that it be acted upon by Allied and “but for Palma’s material misrepresentation, Allied would have never entered into the policy with Palma.
The opinion is thirteen pages long and needs to be read by Insurance Lawyers handling this type of case. It is this author’s understanding that there were mistakes made in the procedural process of this case that caused the result.