A federal court in Georgia recently held that an insurer had the right to rescind a policy based on a material misrepresentation in the insurance application regarding the size of the insured property. Great Lakes Ins. SE v. Queen, 2017 WL 343637 (M.D. Ga. Jan. 23, 2017).

Following a fire, the insured made a claim with his homeowner’s insurer for a damaged shed and its contents. During its investigation of the fire, the insurer became aware that the insured property was more than five acres in size. The insured signed an application that indicated the insured property was less than five acres. In light of the discovery of the actual size of the insured property, the insurer rescinded the policy and returned the premium. The insured continued to seek payment under the policy, and the insurer filed suit seeking a declaration of its right to rescind the policy. The insured argued that he did not make a misrepresentation in his application because he only intended to cover his house and shed, which were situated on land totaling less than five acres.

The district court granted summary judgment to the insurer, finding that the insured had made a material misrepresentation in the application. The district court explained that the application’s questions regarding the size of the property were not ambiguous given that the “insured address” indicated by the insured would include all of the acres of land at that address, and not just the house and shed. The district court determined that the misrepresentation was material based on the insurer’s affidavits showing the insurer would have charged a higher premium and offered different coverage based on the property size.