Section 9.11 Severability/Nonimputation Clauses

• Library: Insurance Practice 2015

Several courts have held that a material misrepresentation in an insurance application voided coverage as to all insureds. Bird v. Penn Cent. Co., 341 F. Supp. 291, 295–96 (E.D. Pa. 1972); INA Underwriters Ins. Co. v. D. H. Forde & Co., 630 F. Supp. 76, 77 (W.D.N.Y. 1985); Shapiro v. Am. Home Assurance Co., 584 F. Supp. 1245, 1251–52 (D. Mass. 1984); Am. Int’l Specialty Lines Ins. Co. v. Towers Fin. Corp., No. 94Civ.2727 (WK)(AJP), 1997 WL 906427 (S.D.N.Y. Sept. 12, 1997). More recently, the concept of severability has been employed to mitigate the harshness of these results. If the policy is severable, misrepresentations on the application are not imputed to insureds who did not participate in the application process. Thus, their separate policies are not impacted by the false statements of others. Wedtech Corp v. Fed. Ins. Co., 740 F. Supp. 214, 218–19 (S.D.N.Y. 1990).

Many...