SIU Investigation Establishes Liars Pants on Fire and Defeats Attempted Fraud

No Coverage if Insured Lies to the Insurer

When a person cannot make the payments on an auto loan, especially when the value of the vehicle is less than the amount owed, the person who is insured against the risk of loss of the vehicle, is tempted to claim the car stolen and get out of the financial problem with an insurance claim.

In Kevineshia Island v. State Farm Fire And Casualty Company, Case No. 16-cv-05449-RS, United States District Court Northern District of California (March 16, 2018) Plaintiff  Island sued defendant State Farm Fire and Casualty Insurance Company (“State Farm”) in connection with State Farm’s denial of her claim of vehicle theft. State Farm moved for summary judgment, arguing that the undisputed evidence showed that it was entitled to deny payment based on Island’s material misrepresentations during the presentation of the claim.


On June 1, 2015, Island left her 2013 Honda Accord (the “insured vehicle”) parked in her driveway in Oakland, California. Island, her son Amare, and her son’s father Eric McDonald went to a mall in Pleasanton, California, to take graduation and Father’s Day photographs. When they arrived back some time after 9:00 p.m., Island noticed that the insured vehicle was no longer parked in her driveway. Island phoned her aunt Arnetta and confirmed that she had not taken the car although Island had the only keys to the vehicle. After making several calls to family and friends, Island reported the theft of her car to the Oakland Police Department at 11:35 p.m.

On the Affidavit of Vehicle Theft executed by Island under oath she denied having any other vehicle claims during the preceding three years. She stated that the insured vehicle had sustained $2,300 of physical damage to its door in 2014 but did not indicate that repairs were made. At the time of the loss Island owed $26,706.74 on her loan. She indicated on the affidavit that her account was not past due. Island had a “GAP” insurance plan for the insured vehicle and claimed there was an iPad Mini worth $699 and a Toshiba laptop worth $800 in the insured vehicle at the time of the loss.

State Farm took two recorded statements – one by an an adjuster and the second by a Special Investigation Unit (SIU) investigator.  SIU investigator Keith Dupart took Island’s second recorded statement. After completing the statement Dupart compared Island’s two recorded statements and Affidavit of Vehicle Theft. Dupart noted that Island failed to disclose in her affidavit and in her first recorded statement that she had made two prior physical damage claims in connection with the insured vehicle within the preceding three years.  Later investigation by State Farm revealed that Island’s bank account was overdrawn multiple times just before the alleged theft. Her credit report indicated serious delinquency and derogatory public records or collections filed.

The vehicle was recovered in Vacaville, California. The vehicle was dirty, with an interior that had been partially disassembled and an airbag removed. No valuables were found in the car. Chad Tredway of North American Automotive Forensic Services  examined the vehicle on October 22, 2015 and found that the ignition lock and ignition had not been forced, defeated, or otherwise compromised. The insured vehicle’s anti-theft system was operational, and there was no damage to the ignition lock or steering column. Tredway concluded, with a high degree of scientific certainty, that nothing other than a properly cut mechanical key had been used to rotate the ignition lock core.

State Farm then took Island’s Examination Under Oath (“EUO”). At this interview, Island testified that she had submitted two claims to State Farm, one for vehicle theft and one for collision. The vehicle theft related to her 2003 Ford Mustang, which was stolen in the summer of 2014. She also made a vandalism claim to AAA after the insured vehicle had been broken into while it was parked in Pinole, California. According to Island, the incident took place in 2013, the same year she switched from AAA to State Farm.

The insured vehicle came with a factory alarm, which never malfunctioned or otherwise had problems.

State Farm denied Island’s claim by letter dated March 2, 2016 because Island made misrepresentations in her claim presentation, initially denying having any other insurance claims over the past three years when she had made several claims including a vehicle theft claim the year before. State Farm also concluded that a forensic examination of the insured vehicle revealed that it had been driven from Oakland to Vacaville with a properly cut mechanical key while Island asserted she had all of the keys to the insured vehicle.


Breach of Contract Claim

An insured’s material misrepresentation in the presentation of a claim vitiates coverage and legally excuses an alleged non-payment by the insurer. [Cummings v. Fire Ins. Exch., 202 Cal. App. 3d 1407, 1418-19 (1988); Perovic v. Glens Falls Ins. Co., 401 F.2d 145 (9th Cir. 1968)].

The undisputed facts revealed that Island made misrepresentations during the presentation of her claim. Island signed the affidavit attesting: “[u]nder penalty of perjury, that the information contained therein is true to the best of my knowledge.” She then had the affidavit notarized. Island again made a misrepresentation in her first recorded statement, in which she acknowledged one prior claim for vehicle theft in July 2014, but did not mention other claims. State Farm later discovered the other claims through its own investigation, which Island later acknowledged.


Materiality is normally a mixed question of law and fact, but a court may decide the question as a matter of law if reasonable minds could not differ on the materiality of the misrepresentations. According to State Farm, a pattern of multiple, similar claims, and whether plaintiff is willing to disclose them is material to an insurer’s investigation, because the prior claims may suggest the insured is making a false claim. Island’s statements regarding her prior vehicle theft claim and other car insurance claims concerned a subject reasonably relevant to the insured’s investigation, and because a reasonable insurer would attach importance to the fact misrepresented, the misrepresentation was material.

Because Island has never admitted to lying about her claim, she reasoned, a court may not conclude that she intended to conceal information from State Farm. However, under the Supreme Court’s holding in Claflin v. Commonwealth Insurance Company, 110 U.S. 81 (1884), “the intent to defraud the insurer is necessarily implied when the misrepresentation is material and the insured willfully makes it with knowledge of its falsity.” [Cummings, supra at 1418.] Accordingly, the insured’s intent to deceive was established as a matter of law.

Although Island says it was a “mistake” to disavow prior claims, she provides no evidence to support an inference that the mistake was innocent or inadvertent. In short, while Island takes issue with State Farm’s assumption that she deliberately gave misleading statements, she does not offer an adequate explanation of why that assumption is unreasonable.

Bad Faith Claim

An insurer breaches the implied covenant of good faith and fair dealing when it withholds policy benefits unreasonably or without proper cause. In this case the undisputed evidence shows that State Farm did not act unreasonably when it denied Island’s claim. State Farm expended a significant amount of time and effort investigating Island’s claim. It obtained Island’s Affidavit of Vehicle Theft, took two recorded statements of Island, reviewed her cell phone records and financial documents, and took Island’s EUO. Island does not deny making inconsistent statements in the affidavit and two recorded statements, nor is she able to explain why any mistakes she made were innocent. Although she disputes State Farm’s assertion that she was experiencing financial difficulties at the time of the loss, State Farm has produced substantial evidence of a financial motive to stage the loss. Island testified at her EUO that she wanted to trade-in the insured vehicle for a larger one, but could not do so because she was underwater on the loan by $15,000.

Weighing the facts, State Farm was entitled to resolve disputed issues by denying Island’s claim. For the reasons set forth above, the motion for summary judgment is granted.


It is not only not nice to lie to your insurance company, it is fatal to your claim. Ms. Island lied on multiple occasions and, as a result, recovered nothing. She attempted an insurance fraud and was caught as a result of a thorough investigation by State Farm’s SIU and counsel. She should consider herself lucky that she was not charged with felony insurance fraud, a crime in California she was obviously attempting to commit. See California Penal Code Section 550.

© 2018 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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