Anticipated Decision in Heinz Rescission Litigation Upholds Ruling Voiding $25 Million Insurance Policy Due to Misrepresentations in the Application

In a much anticipated decision, the Third Circuit Court of Appeals upheld the rescission of H.J. Heinz Company’s $25 million production contamination insurance policy because Heinz made material misrepresentations concerning previous product contamination claims when it applied for the policy. H.J. Heinz Company v. Starr Surplus Lines Insurance Company, No. 16-1447 (3d Cir. Jan. 11, 2017). The fact that Heinz’s application misrepresented its history of prior contaminations losses was clear. The insurer’s application asked Heinz to disclose past complaints, recommendations,
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Insurers Beware: The Illinois Department of Insurance Issued a Notice of Proposed Rule Regarding Knowledge of Misrepresentations and False Warranties

In August, the Illinois Department of Insurance (DOI) proposed its second rule on misrepresentations and false warranties in less than two years. Citing various concerns, the DOI withdrew its December 2014 proposed rule nearly a year ago, in October 2015. The impetus for the new proposed rule appears to be the DOI’s perception that insurers are not considering “readily available information” before seeking to rescind insurance policies. The new proposed rule on misrepresentations would be promulgated as Ill. Admin. Code
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Presumed Innocent: But Rescission Still Available to Void Coverage Due to Misrepresentations

A court rescinded a Georgia attorney’s professional liability coverage after his partner stole more than a million dollars from clients and lied about it on their firm’s insurance application. A federal district court in Georgia granted an insurer’s motion for summary judgment earlier this month, permitting rescission of the professional liability insurance policy issued to the attorney’s law firm. ProAssurance Cas. Co. v. Smith, No. CV415-051, 2016 U.S. Dist. LEXIS 105033 (S.D. Ga. Aug. 9, 2016). From 2013 to 2014, the attorney’s
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Insurer Does Not Waive Right to Rescind Policy After Cancellation Due to Misrepresentation – If the Rescission is Based on Different Misrepresentations

The recent case of Auto-Owners Ins. Co. v. Yahia Motan & Motan Yahia reminds all practitioners of the importance of accurate responses in insurance applications. Auto-Owners addressed the issue of misrepresentations made in commercial insurance policies. 2015 Mich. App. LEXIS 1659 (MI App. 1st Dist. 2015). Decided on September 8, 2015, the Michigan Appellate Court found in favor of the insurer, finding that it relied on the insured’s misrepresentations made in the application to justify cancellation and rescission. Najieb Jabbar,
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