General Insurance PrinciplesQuestion 140 of 158
An applicant for a homeowners policy fails to mention that her roof is 28 years old and showing daylight through cracked tiles. The insurer later denies a wind claim and rescinds the policy. The insurer's likely legal theory is:
a.The roof is an act of God and excluded by every policy
b.Policy was voided by mutual mistake
c.The insured exceeded policy limits
d.Material concealment under §331/§334 — a fact that would influence a prudent insurer was not disclosed
Explanation
California Insurance Code §334 defines a MATERIAL fact as one that would influence a prudent insurer in accepting the risk or fixing the premium. A 28-year-old failing roof clearly meets that test. Under §331 the insurer may rescind whether the omission was intentional or merely negligent.
Law Reference: Cal. Ins. Code §334Practice all 158 questions free — no signup required.
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