Harboring Dog Results In Rescission of Homeowner’s Policy
Security Mutual Insurance Company sued its insured to rescind a homeowner’s insurance policy upon the grounds that the insured had misrepresented his ownership of a dog in the application for insurance. Security Mutual Insurance Company vs. George E. Perkins, et. al., (NY A.D. 3d, July 7, 2011).
Perkins applied to Security Mutual for a homeowner’s policy covering his residence in Schenectady, New York, in May, 2000. The application specifically asked whether the applicant had “any animals or exotic pets.” The answer was “no.” Two years after the issuance of the policy, Peter Vrochopoulos, visited the insured residence and was bitten by a German Shepard/Pit Bull mix, resulting in significant injuries.
After being notified of the claim, Security Mutual advised Perkins that it was cancelling his homeowner’s insurance policy on the ground that the property had become uninsurable as a result of his harboring a vicious dog. Ten months later, Security Mutual learned that Perkins had owned the dog at the time he completed the policy application. Security Mutual then commenced an action to rescind the policy upon the grounds of material misrepresentation.
Security Mutual moved for summary judgment. Supreme Court denied the motion, and the company appealed. The Third Department reversed.
The Appellate Court rejected the lower court’s finding that the pet-ownership question was unclear and was ambiguous. The Court noted:
Nevertheless, we find no ambiguity because, while a dog is not an exotic pet, it clearly is an animal, and Perkins admitted that he understood that the term ‘any animals’ included pet dogs.
The Court also found that the lower court had misconstrued the Third Department’s prior holding in Stein vs. Security Mutual Insurance Company, 38 A.D.3d 977 (3d Dep’t., 2007). The Court noted that in Stein, the insurer knew that the insured had made a material misrepresentation in his application and “[w]ith that knowledge in hand, the insurer chose to cancel the policy rather than rescind it.” Thus in Stein the insurer was estopped from later seeking to rescind the policy ab initio.
This case is significant in that it demonstrates the ability of an insurer to seek to rescind a policy based on a material misrepresentation in the application when it discovers the material misrepresentation after having canceled the policy.
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