Insurance Policy Conditions (a/k/a/ Land Mines): Part 21 – “Intent” and the Fraud Condition

Most policies contain a “Concealment or Fraud” condition that reads along these lines: “With respect to all persons insured under this policy, we provide no coverage for loss if, whether before or after a loss, one or more persons insured under this policy have: a. Intentionally concealed or misrepresented any material fact or circumstance; b. Engaged in fraudulent conduct; or c. Made false statements; relating to this insurance.” Insurers sometimes argue an insured’s intent to defraud should not be assessed by the court or jury in deciding whether the insurer’s fraud-based claim denial was appropriate; insurers sometimes argue that even accidental misrepresentations, mistakes, or the like bar coverage. Wrong, in my opinion.

If the insurer’s fraud-based claim denial relies on the concealment and misrepresentation subcategory (“a”) of the above provision, then the plain language of the insurance contract (which includes the word “intentionally”) makes clear that intent is germane.

If the insurer’s fraud-based claim denial relies on the fraudulent conduct (“b”) or false statement (“c”) subcategories of the above provision, then the Florida Supreme Court’s Robinson decision makes clear that intent is germane.¹ More specifically, the Robinson court determined that the fraud and false statement categories of an insurance policy’s fraud provision are available to the insurer as a defense to coverage when the fraud or false statement (a) pertained to a “material fact”, and (b) was “knowingly and willfully made.”² The word “willful” is synonymous with the word “intent.”³ One more point of interest – it is the carrier that has to prove intent / willfulness / purposefulness.⁴

Intent is germane to the viability of the carrier’s fraud-based claim denial.

To read previous posts in my series on insurance policy conditions, click here.

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¹ Am. Ins. Co. of Newark, N.J. v. Robinson, 163 So. 17 (Fla. 1935). See also Wendel v. State Farm Fire & Cas. Co., 435 So. 2d 284 (Fla. 5th DCA 1983) (assessing the intent of a policyholder to defraud the insurer via an alleged misrepresentation and the materiality of the alleged misrepresentation, and adjudicating the matter in favor of the policyholder).
² Robinson, at 20.
³ See Bryan A. Garner, Black’s Law Dictionary 768 (2001 2d pocket ed.) (defining “willful” as “voluntary and intentional, but not necessarily malicious” (emphasis added)).
⁴ See, e.g., Robinson, 163 So. at 21 (holding that “the burden of proof [for a fraud defense to coverage] should be on the insurance company to show that, when examined, the insured knowingly and willfully made a false answer concerning some matter of fact as to which he knew or was apprised was material to the inquiry being made by the insurance company”); Chaachou v. Am. Cent. Ins. Co., 241 F. 2d 889, 893 (5th Cir. 1957) (holding that “the insurer must satisfy the heavy burden of establishing that the conduct complained of was done and was a wilful, purposeful misrepresentation of facts having substantial materiality under circumstances to which the law would attribute the intention to defraud”).