When their home was destroyed by fire, homeowners policy insureds were denied recovery by their insurer when it was discovered that their previous homeowners policy had been canceled by another insurer for delinquency in premium payments. They had stated in their application for insurance that no policies had been canceled within the last five years. The insurer asserted that this was a material misrepresentation.

The insureds sued for breach of contract, claiming they thought that it was their automobile policy that had been canceled. The insurer moved for summary judgment under Georgia Code Ann. 33-24-7 (b) (3). The trial court granted the insurer's motion, finding that the insureds failed to present evidence against an affidavit by the insurer's underwriting manager that the company would not have issued the policy had it known of the prior policy cancellation for cause.

On appeal it was noted that Georgia Code Ann. 33-24-7 (b) (3), applicable to misrepresentations in insurance policies, provided that:

"(b) Misrepresentations, omissions, concealment of facts, and incorrect statements shall not prevent a recovery under the policy or contract unless: ....The insurer in good faith would....not have issued the policy or contract....if the true facts had been known to the insurer as required either by the application for the policy or contract or otherwise."

The appeal court said that the recovery could be barred under the statute only if misrepresented facts were material, a material misrepresentation being one "that would influence a prudent insurer in deciding whether to assume the risk of providing coverage." The court found that the insurer "demonstrated," by way of the statements of its underwriting manager, that the misrepresentation by the insureds was material, and that the policy would not have been issued had the facts been known. The insureds did not offer evidence to the contrary.

The judgment of the trial court was affirmed in favor of the insurance company and against the insureds.

(NAPPIER ET UX., Plaintiffs, Counter- Defendants, Appellants v. ALLSTATE INSURANCE COMPANY, Defendant, Counter- Claimant, Appellee. United States Court of Appeals, Eleventh Circuit. No. 91-8521. May 13, 1992. CCH 1992 Fire and Casualty Cases, Paragraph 3734.)