The Mitchell Case
By affirming the rescission of an insurance policy because of the misrepresentation or concealment of material fact by Mr. Mitchell. The court in Mitchell defeated an argument that statutory language in a policy of insurance changed the law of rescission.
The Court of Appeal summarized its holding as follows:
[A]n insurer may, under Insurance Code sections 331 and 359 [of the California Insurance Code], rescind a fire insurance policy based on an insured’s negligent or unintentional misrepresentation of a material fact in an insurance application, notwithstanding the willful misrepresentation clause included in the required standard form fire insurance policy (Insurance Code sections 2070 and 2071). [Emphasis added.]
Mitchell individually was the named insured under an insurance policy issued by United National that provided coverage for a commercial building owned by the Mitchell Family Trust in Los Angeles (the building).
During the policy period, the building was destroyed by an arson fire. The arsonist, an acquaintance of Mitchell’s, perished in the fire. In the ensuing investigation, United National discovered several misrepresentations in Mitchell’s application for insurance, rescinded the policy, and offered to return Mitchell’s premium. [Mitchell v. United National Ins. Co. (2005) 127 Cal. App.4th 457, 469]
“[An insurance company] has the unquestioned right to select those whom it will insure and to rely upon him who would be insured for such information as it desires as a basis for its determination to the end that a wise discrimination may be exercised in selecting its risks.” (Robinson v. Occidental Life Ins. Co. (1955) 131 Cal.App.2d 581, 586.) (Emphasis added.)
© 2020 – Barry Zalma
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 52 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts