Universal Prop. & Cas. Ins. Co. v. Johnson, No. 1D12—0891, 2013 WL 1809639 (Fla. 1st DCA April 30, 2013)
Under the terms of the homeowners’ insurance policy and applicable Florida law, any misrepresentation–even an innocent one–made by the insured on the policy application may serve as a basis for voiding the policy; the insurer need not prove that the insured made the misrepresentation with an intent to deceive.
Universal Property & Casualty Insurance Company insured the home of Jamon and Chaka Johnson. On March 13, 2008, an accidental fire destroyed the Johnsons’ home. Universal denied the Johnsons’ claim because it determined that the Johnsons had falsely answered one of the questions on their insurance application. Specifically, the Johnsons had answered “no” to the following question: “Have you been convicted of a felony in the last ten years.” In fact, Mrs. Johnson had been convicted of five felonies in July of 1998, which was eight-and-a-half years prior to the date of the application. However, the Johnsons asserted the position that the misrepresentation was unintentional and that they were confused about when the convictions were actually entered.
The Johnsons sued Universal for breach of contract. Universal filed a counterclaim seeking a declaratory judgment that it was permitted to rescind the insurance contract based on Fla. Stat. § 627.409(1), which provides, in pertinent part:
“[A] misrepresentation, omission, concealment of fact, or incorrect statement [made by or on behalf of an insured in an application for an insurance policy] may prevent recovery under the contract to a policy only if any of the following apply:
(a) The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by insurer.
(b) If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss.”
The trial court entered partial summary judgment in favor of the Johnsons, ruling that Universal could not rely on Section 627.409(1) because it had adopted, by virtue of the language in its insurance contract, a more stringent standard for rescission on the ground of misrepresentation than the statute provides. On appeal, Universal argued that the trial court erred in granting the Johnsons’ motion for summary judgment, which required Universal to prove that the Johnsons’ misrepresentation as to Mrs. Johnson’s criminal history was an intentional misrepresentation before the claim could be denied and the insurance contract voided.
Whether the insurance contract adopted a more stringent standard for voiding the policy than provided in Section 627.409, thereby requiring Universal to prove the insured made the misrepresentation in the policy application with the intent to deceive.
Neither the insurance policy nor Florida statutory law requires that a misrepresentation in a policy application be intentionally made for the contract to be voided.
Under Florida law, the general rule is that a misrepresentation or omission in a policy application need not be intentional before recovery may be denied pursuant to Section 627.409. The issue, in this case, was whether the insurance contract adopted a more stringent standard than the standard provided in Section 627.409. The insurance policy provided, in pertinent part:
2. Concealment or Fraud. The entire policy will be void if, whether before or after a loss, an “insured” has:
a. Intentionally concealed or misrepresented any material fact or circumstance;
b. Engaged in fraudulent conduct; or
c. Made false statements;
relating to this insurance.
Universal argued that subsection 2c of the policy did not require the insured’s “false statements” be made with the intent to deceive. Because subsections 2a and 2b do require proof of intent, there would be no need to include subsection 2c in the policy if not for the purpose of rendering the policy void if the insured has made even innocent misrepresentations. The court agreed that the policy did not impose a more stringent standard for voiding a policy than is provided in the statute. The court agreed with Universal’s position that, given the language of subsection 2a, subsection 2c would be “superfluous” if a “false statement” under 2c included only intentionally false statements.