General Insurance PrinciplesQuestion 140 of 474
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.Wear and tear on the roof is an excluded peril, so the insurer may rescind the entire policy rather than merely deny the wind claim
b.Material concealment under §331/§334 — a fact that would influence a prudent insurer was not disclosed
c.The claim exceeds the Coverage A limit, which under §2070 gives the insurer the right to void the contract from inception
d.The contract is voidable for mutual mistake of fact under Civil Code §1577, because neither party knew the true condition of the roof when the policy was written
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 §334This topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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