Policy Rescinded Based On Insured's Material Misrepresentation In Renewal Application

An Indiana federal court, applying Indiana law, has held that an insurer could rescind a claims-made-and-reported professional errors and omissions policy based on misrepresentations made by the insured in the policy renewal application.Accent Consulting Grp., Inc. v. Great Am. Assur. Co., 2024 WL 2272126 (S.D. Ind. May 20, 2024). The court allowed the insurer to raise the rescission argument for the first time in coverage litigation because the court found that the insurer had not breached its duty to defend.

During the previous policy period, a former customer filed a consumer complaint with the Indiana Office of the Attorney General (the Indiana OAG) against the insured real estate appraiser, demanding an investigation into an appraisal done by the insured. The Indiana OAG commenced an investigation and sought documents from the insured, which she provided. The insured did not report the consumer complaint or the Indiana OAG investigation to her insurer. Less