A Farmowners policy insured appealed from trial court judgment for the insurer that the policy was void because of a misrepresentation in the application with regard to a mortgage. (The insurer had denied coverage when the house was destroyed by fire.) The court determined that the insured's statement materially increased the insurer's risk of loss when the amount of the mortgage was, in fact, 50% greater than represented.

The appeal court cited Tennessee Code Ann. 56-7-103 for definition of "a material fact....as one that increases the risk of loss when relied upon by the company in issuing the policy." It noted a standard provision in the policy "rendering the policy void for the intentional concealment or misrepresentation of any material fact relating to the insurance."

Despite the fact that the insured denied having furnished some of the answers in the application, he had signed it and the insurer issued a policy on the basis of the information contained in it. The insurer had relied on a material misrepresentation in making the contract. The appeal court concluded that the mortgage misrepresentation materially increased the risk to the insurer.

The trial court had not ruled on two other alleged misrepresentations in the application, i.e., the title to the property and prior losses. It was found that the title was not as described and that the insured had incurred prior losses, when the application stated otherwise. The appeal court concluded that these, too, were material misrepresentations.

The judgment of the trial court was affirmed in favor of the insurer and against the insured. The policy was void by virtue of misrepresentations that materially increased the risk of loss.

(SINE, Plaintiff, Appellee v. TENNESSEE FARMERS MUTUAL INSURANCE COMPANY, Defendant, Appellee. Tennessee Court of Appeals, Middle Section at Nashville. No. 01-A-01-92090CV-00336. April 16, 1993. CCH 1993 Fire and Casualty Cases, Paragraph 4270.)