The Court of Appeals recently provided further insight on what type of misrepresentations increase the risk of loss. In the case of Freeze v. Tennessee Farmers Mutual Insurance Company, filed March 28, 2017 (Freeze v. TFMIC), the Eastern Section Court of Appeals upheld the grant of summary judgment to Tennessee Farmers in a case which alleged misrepresentation under T.C.A. § 56-7-103, which provided as follows:

56-7-103. Misrepresentation or warranty will not avoid policy – Exceptions. – No written or oral misrepresentation or warranty therein made in the negotiations of a contract or policy of insurance, or in the application therefor, by the insured or in the insured’s behalf, shall be deemed material or defeat or void the policy or prevent its attaching, unless such misrepresentation or warranty is made with actual intent to deceive, or unless the matter represented increases the risk of loss.

The Court first acknowledged that determining whether a particular misrepresentation increased the risk of loss is a question of law for the Court. The Court ruled misrepresentations contained on an application signed (but perhaps not read) were sufficient to void the policy of insurance when made with respect to:

  1. Pending legal actions;
  2. Charges or convictions of felony crimes; and/or
  3. Charges or convictions of arson, fraud, theft, or drug related crimes.

The Court found it particularly important Tennessee Farmers had made it clear that two of these questions provided that the agent would be unable to bind coverage if the questions were answered in the affirmative. The Court also reaffirmed the longstanding principle that the failure to read an application does not insulate an applicant from errors or omissions on a signed application.  The Court held these misrepresentations increased the risk of loss to Tennessee Farmers under T.C.A. § 56-7-103, and summary judgment was appropriate.