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Insurance Company Must Pay Claim Despite Misrepresentations on Policy Application

In the case of Joy v. AmGuard Ins. Co., 6th Cir. N. 22-5811 (Aug. 22, 2023), a federal appellate court held that the insurance company was liable to the policy holder when the insurance company failed to adhere to company policy and verify the presence of a sprinkler system despite the policy holder making misrepresentations about the presence of a sprinkler system.

In this case, the policy holder argued that the insurance company had to pay the claim when the policy holder’s house was destroyed in a fire and the insurance company failed to verify if an automatic sprinkler system existed as required by company policy. In response, the insurance company argued that the policy holder’s application for insurance incorrectly stated the house had an automatic sprinkler system. The federal appellate court agreed with the policy holder.

In support of its decision in favor of the policy holder, the federal appellate court explained that the insurance company had a policy to verify the presence of an automatic sprinkler system that was not followed. The federal appellate court further explained that the insurance company admitted that they would not have denied the policy holder’s application had the company been aware of the absence of an automatic sprinkler system but would have simply charged a higher premium to the policy holders.

To read this case, click here.

Note: This case in the 6th Federal Circuit was based on Tennessee law, not Ohio law. The result may have been different if Ohio law were applied.

Authors: Matthew John Markling and the McGown & Markling Team.

Note: This blog entry does not constitute – nor does it contain – legal advice. Legal jurisprudence is like the always-changing Midwestern weather. As a result, this single blog entry cannot substitute for consultation with a McGown & Markling attorney. If legal advice is needed with respect to a specific factual situation, please feel free to contact a McGown & Markling attorney.

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