Broker can't intentionally misrepresent facts on an insurance applicationIn 1998, a California general contractor was sued for its work on a single-family residence. The contractor's insurer initially undertook the defense of the claim under a reservation of rights. After the insurer determined that certain information in the contractor's insurance application was false, the insurer withdrew its defense. The contractor sued the insurer, alleging breach of written contract and of the implied covenant of good faith and fair dealing. The contractor also sued his broker for negligence and breach of fiduciary duty.
In its answer to the contractor's complaint, the insurer filed a cross-complaint for declaratory relief, reimbursement of defense costs and rescission of its policy. The broker, meanwhile, filed a motion for summary judgment concerning the contractor's suit against it. That motion, which was unopposed, was granted in 2002 and judgment was entered.
The insurer also filed a cross-complaint against the contractor's insurance broker, alleging that it submitted an application stating that the insured worked only as a drywall contractor. In its complaint, the insurer charged the broker with fraud, negligence and negligent misrepresentation.
Recommended For You
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
