Undisputed Material Misrepresentation Sufficient to Support Rescission

Misrepresentation to Save Premium Eliminates Coverage

People who have no experience with insurance when faced with a potential savings of insurance premium if the insured does not present true facts to the insurer is exceedingly expensive and can surprise the insured to find he has no coverage at all.

In Great Lakes Insurance SE v. Charles Queen, Slip Copy, United States District Court, M.D. Georgia 2017 WL 343637 (01/23/2017) defendant Charles Queen was insured under a homeowners insurance policy issued by Plaintiff Great Lakes Insurance SE. One of Queen’s outbuildings was destroyed in a fire, and Queen made a claim under the policy to recover for the damage to the contents of that building. When Great Lakes investigated the claim, it discovered that Queen’s home was on an eight acre parcel. Queen’s application for the insurance, which was completed by his independent agent but signed by him, indicates a response of “no” to a question that specifically asked whether the property to be insured was on more than five acres.


The record revealed that Queen owns the property located at 1213 Old Monroe Madison Highway in Monroe, Georgia. His mother previously owned the property, which was divided into four tracts. When Queen’s mother died, Queen inherited tracts 3 and 4, and Queen and his sister jointly inherited tracts 1 and 2. Queen’s sister later deeded Queen her interest in tracts 1 and 2; Queen now owns the entire parcel located at 1213 Old Monroe Madison Highway. The parcel is approximately 8.2 acres.

After Queen became the owner of the property he sought insurance coverage. He retained Mike Sorrells, an independent insurance agent with Alfa Agency, to procure homeowners insurance. Queen told Sorrells that he wanted to insure the dwelling and outbuilding on one of the tracts within the entire parcel. That particular tract was less than five acres. Queen was aware that if he sought coverage for the entirety of his property, he would have been required to pay an additional premium and procure a different type of insurance coverage.

Sorrells completed an insurance application on behalf of Queen. The application does not indicate that coverage is only sought for a certain tract within the parcel. The application asks: “Is the property situated on more than five acres?” Sorrells checked “no.” Queen signed the application, stating that he had reviewed the application and declaring that the statements in the application were true, to the best of his knowledge.

Southern Insurance Underwriters, Inc. acts as managing general agent for Great Lakes and issues policies on behalf of Great Lakes pursuant to certain underwriting guidelines. Southern Insurance relied on Queen’s application in deciding whether to issue Queen a policy and on what terms. Southern Insurance also relied on the information provided in Queen’s application in deciding whether to renew Queen’s policy. Great Lakes submitted uncontroverted evidence that if Queen had disclosed that the insured location was more than five acres, Southern Insurance “could not have originally issued the Policy or continued coverage under the Policy.” Instead, Southern Insurance “would have charged a different premium, offered different coverage, or written coverage under a different insurance carrier.” Queen presented no evidence to contradict this assertion.

Queen did not dispute that the property identified by this address exceeds five acres. By so doing he admitted he misrepresented a material fact asked by the application for insurance.

During the coverage period, a shed on Queen’s property caught fire, and the contents of the shed were destroyed. Queen claims that the destroyed personal property was worth $120,000. This shed is near Queen’s house, and the house and shed both sit on a tract that is less than five acres. While investigating the claim, Great Lakes discovered that the parcel is greater than five acres. Based on that discovery, Great Lakes concluded that Queen had made a material misrepresentation in his insurance application and rescinded the policy. Great Lakes tendered to Queen a refund of all the premiums he had paid for the policy.


To void Queen’s insurance policy, Great Lakes must demonstrate both that [Queen] made false representations and that the misrepresentations were material from the view of a prudent insurer.

Was There A Misrepresentation?

Construction of an insurance contract (or application) is generally a question of law for the Court. If the terms are unambiguous, then the insurance provision must be enforced as written. Ambiguity exists in an insurance policy when its terms are susceptible to different reasonable interpretations. Here, the Court foundthat even though Queen may not have fully understood the question in the application, it is not ambiguous.

The application asks if “the property” is situated on more than five acres. Though “the property” is not defined, its plain meaning is the property for which coverage is sought based on the face of the application. The application also asks for a “location address” of the property to be insured. The undisputed evidence in the present record indicates that the property associated with this insured location address exceeded five acres.

The application on its face unambiguously seeks coverage for the property located at 1213 Old Monroe Madison. And that is how the policy was issued; the insured location is approximately 8.2 acres. The fact that Queen may have had no intention to mislead anyone has no legal significance in the present context, which the Court finds to be a bit harsh but the law.

Was the Misrepresentation Material?

A misrepresentation in an insurance application shall not prevent recovery under an insurance policy unless it is material either to the acceptance of the risk or to the hazard assumed by the insurer would not have provided coverage with respect to the hazard resulting in the loss if the true facts had been known to the insurer as required either by the application for the policy or contract or otherwise.

Dianne Brennan, an underwriting manager at Southern Insurance, the managing general agent for Great Lakes with regard to Queen’s policy testified by affidavit that if Queen had disclosed that the Property was greater than five acres, Southern Insurance could not have originally issued the Policy or continued coverage under the Policy. According to Brennan, Queen’s misrepresentation about the size of the insured location “changed the nature, extent, and character of the risk.

Georgia courts generally find that summary judgment may be granted on the materiality issue based on the uncontroverted affidavit of an insurance company’s representative establishing that the policy would not have been written as issued had the insurance company known of the misrepresentation. Without some evidence from Queen to create a genuine fact dispute on the issue of materiality, Great Lakes is entitled to summary judgment on this issue.


In summary, based on the present record, there is no genuine fact dispute that Queen, through his agent Sorrells, misrepresented the size of the insured location in Queen’s insurance application. There is also no genuine fact dispute that the misrepresentation was material. Accordingly, Great Lakes was entitled to rescind the policy. Therefore, the policy may be rescinded even though Queen thought he was only insuring his house and the outbuilding that sat on less than five acres of his entire eight acre parcel.


Rescission is an equitable remedy where the court determines it would not be fair to allow an insurance policy to exist. As a result of the rescission all premium paid is returned to the putative insured and the policy is returned to the insurer or declared void from its inception.

ZALMA-INS-CONSULT                      © 2017 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness 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 49 years in the insurance business.

Mr. Zalma is the first recipient of theLEGEND-TROPHY-2 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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