Recission of policies for material misrepresentation

Pursuant to Fla. Stat. Ann. § 627.409, an insurer may rescind an insurance policy based upon a material misrepresentation in the application for insurance.

This statute permits rescission for misrepresentation of “[a]ny statement or description made by or on behalf of an insured”. Thus, the misrepresentation does not necessarily have to be by the insured, it may be on behalf of the insured.

Additionally, under the statute, misrepresentations need not be purposeful or knowing to void the policy. Even unintentional misrepresentation or omissions in an application for insurance will prevent recovery if the insurer provides that they were material to the risk taken, or that the insurer would not have issued the policy, or issued it at the same premium had the true facts been known. See Certain Underwriters at Lloyd’s London v. Jimenez, 197 So. 3d 597 (Fla. 3rd DCA 2016)(In order for an insurer to rescind an insurance policy on the basis of a misrepresentation in the application, the misrepresentation need not be fraudulently or knowingly made, but need only affect the insurer’s risk or be a fact which, if known, would have caused the insurer not to issue the policy or not to issue it in so large an amount.)

As noted in the statute, the misrepresentation must be material to the risk. If the misrepresentation is not material, it will not void the policy. See Laboss Transportation Servs., Inc. v. Glob. Liberty Ins. Co. of New York, 188 F. Supp. 3d 1320 (S.D. Fla. 2016)(Company did not make material misrepresentation by removing van driver from its list of drivers, while still allowing him to drive; policy did not limit coverage to listed drivers or drivers approved by insurer, and van driver was a lawful permissive driver under the policy; also noting that insurer did not charge any additional premium when van driver was added back on listed drivers).
However, if you are a carrier looking to rescind a policy based upon material misrepresentation in the application, make sure to pay attention to any language in your specific policy regarding recission. Insurance Policies sometimes contain their own language regarding rescission. Sometimes, the language in a policy contains greater limitations then § 627.409, Fla. Stat. For example, some policies state that rescission is permitted only “when a person knowingly conceals or misrepresents a material fact.” If your policy contains such language, a court will find that the policy language controls, rather than the statutory requirement, and only allow rescission for “_*knowing*_” misrepresentations. See Green v. Life & Health of America, 704 So. 2d 1386 (Fla. 1998).

Thus, it is important to pay attention to the specific language in the policy at issue and the facts regarding the alleged misrepresentation in order to determine if rescission is permissible.