The Kentucky Court of Appeals recently reversed a trial court decision granting summary judgment to an insurer, finding that the question whether the insured misrepresented his criminal history by signing an application completed by an agent was a disputed question of fact. Rudolph, et al. v. Shelter Insurance Companies, No. 2007-CA-000799-MR (Ky. Ct. App. Sept. 5, 2008).

The insureds’ home was destroyed by fire. The insurer rescinded the insureds’ homeowner’s policy and denied the insureds’ claim on the ground that the insureds had made a material misrepresentation on their insurance application by failing to disclose that they each had a criminal record. The policy application asked whether the insured or anyone in the insureds’ household had ever been convicted of or plead guilty to a felony. The application received from the insureds, who had each previously plead guilty to separate drug related felonies, answered that question in the negative. The insured admitted he signed the application for insurance coverage, but asserted that he did not thoroughly review the application as it was prepared by the insurance agent.

The following year, a lender instituted foreclosure proceedings against the insureds. One of the insureds moved to add the insurer as a third party defendant and filed a third party complaint against it, alleging that the insurer was liable to the lender under its insurance policy. The trial court granted summary judgment to the insurer, finding the insurance policy void as a matter of law as a result of the material misrepresentation on the Insured’s application.

On appeal, the insured contended that the false answer was not a misrepresentation in his policy application because he did not personally complete the application (which was filled out by the insurance agent, who allegedly never asked him if he had been convicted of a felony) and he signed the application in a “perfunctory manner” without reading its contents. The Court of Appeals reversed summary judgment, holding that the circumstances surrounding the completion and signing of the application presented material disputed questions of fact as to whether the insured was asked by the insurance agent whether he had been convicted of a felony and whether he signed the application in good faith without knowledge of the false answer.

For a complete copy of the opinion, please click here.