New York has a reputation as a state that's pretty friendly to consumers, so I think it's notable that an appellate court last month voided a Homeowners insurance policy because the insured lied on the application. George Perkins, who owned a dog, answered "no" to the question on the application asking whether he owned any animals or exotic pets. Two years later, his dog bit someone visiting the home; the victim suffered "significant injuries." When the insurance company received notice of the claim, it sent a cancellation notice on the grounds that the risk had changed -- the insured now had a "vicious dog." Almost a year later, the insurer found out that the protective pooch had been living there all along. The insurer sought to void the policy. As you can well imagine, lawsuits ensued. Incredibly, the trial court found the question on the application to be unclear and ruled against the carrier.
The Appellate Division's Third Department (the same department that will consider IIABNY's appeal concerning Regulation 194) reversed the trial court, saying, "(W)e find no ambiguity because, while a dog is not an exotic pet, it clearly is an animal..." This is a polite way of saying, "Give me a break."
It's fashionable to be cynical and believe that judges today lack common sense. This decision is exhibit A for the opposite argument. Long-time readers of this blog know that my heart melts at the sight of a dog, but both the insurer and the appellate court got it right on this one. The requirement for dealing in good faith goes both ways. Tell the truth on your insurance applications.
Tim, I agree with you 100%. It appears the court got it right on this. I hope the court is as insightful with their decision on our Reg 194 appeal!
Posted by: Richard A. Poppa, CAE, AAI | August 18, 2011 at 03:23 PM
It's really amazing how the consumers lie to the insurance agents and companies & think that they will never the be the wiser. It just goes to show that honesty is the always the best policy.
Posted by: Margie Millin | August 19, 2011 at 06:19 AM
Margie,
Unfortunately, this type of behavior breeds cynicism among underwriters and claim adjusters. The result is that the seller doesn't trust the buyer and vice versa. Not a healthy business relationship.
Posted by: Tim Dodge | August 19, 2011 at 08:21 AM
What a great potential and career you have. I've read some of your post here. And I am impressed with your knowledge and ideas. Thanks for sharing your knowledge.. :)
Posted by: stephanie | September 22, 2011 at 02:41 AM
Thank you!
Posted by: Tim Dodge | September 23, 2011 at 12:54 PM