Minor Claims Fraud Voids Entire Policy

In 2017, there was a large house that was insured under a homeowners policy issued by the defendant to the plaintiff and his then-wife. A fire completely destroyed the house on May 16, 2017.

The fire marshal was unable to determine the cause of the fire but could not rule out that it originated at the grinder.

The plaintiff filed an insurance claim. The defendant made an advance payment of $10,000 to the plaintiff for loss of personal property.

An adjuster interviewed the plaintiff on May 22, taking an initial recorded statement. During the interview, the plaintiff represented that he made $150,000 annually as a general contractor with his business, Kelly and Sons Construction, Inc. He also represented that, in the 5 months before the fire, he had been staying in the property’s guesthouse or with his girlfriend.

After the interview, the defendant set loss reserves on the plaintiff’s claim. It also began paying "Additional Living Expense" (ALE) benefits to cover the cost of alternative housing.