The United States District Court for the District of New Jersey closed out 2016 with a declaration that the Products and Workmanship exclusions found in a manufacturer’s Building and Personal Property policy is ambiguous. In National Manufacturing Company v. Citizens Insurance Company of America, et al., 2016 U.S. Dist. LEXIS 180145 (D.N.J. Dec. 30, 2016), a manufacturer of stainless steel battery casings sought coverage for losses to its stock after an anti-corrosive chemical applied during the manufacturing process caused pits to develop in the casings. The chemical pitting rendered the casings unfit for their intended use in medical pacemaker batteries. The policy contained a “Products Exclusion” that negated coverage for product losses “caused by or resulting from error or omission by any person or entity . . . in any stage of the development, production, or use of the product[.]” The policy also contained a “Workmanship Exclusion” for losses caused by “faulty, inadequate or defective . . . materials.” Both exclusions were subject to an exception when the excluded loss “results in a ‘Covered Cause of Loss’.” Covered Cause of Loss, in turn, was defined as “Risks of Direct Physical Loss unless the loss is Excluded.” The court held that the loss fell within the broadest scope of the Products and Workmanship exclusions, but the “Covered Cause of Loss” exceptions “at best render the exclusions ambiguous and at worse incomprehensible.” Both the insurer and the insured had argued that the exceptions were intended to invoke the ensuing loss doctrine, but the court rejected these arguments because the policy did not use the term “ensuing loss.” Instead, the court reasoned that the policy language was circular because loss was covered unless it was excluded and excluded unless it was covered. The court construed the exclusionary language against the insurer and concluded that the loss was covered. Add to Flipboard Magazine.
In John Robert Sebo, etc. v. American Home Assurance Company, Inc., Supreme Court case number SC14-897, the Florida Supreme Court reversed a Second District Court opinion which found the efficient proximate cause doctrine applicable to cases involving multiple perils and a first-party insurance policy. In 2005, Mr. Sebo purchased a four-year-old home in Naples, Florida. He subsequently purchased a “manuscript” homeowner’s insurance policy (not a standard form, but rather created specifically for the Sebo residence) through American Home Assurance Company (“AHAC”). This policy insured against “all risks” and provided $8,000,000.00 in coverage. Soon after purchasing the property, water began to intrude during rainstorms. After months of leaks – including storm damage from Hurricane Wilma – Sebo finally reported the water intrusion to AHAC on December 30, 2005. After investigating the claim, AHAC denied coverage for most of the damage (AHAC did tender its $50,000.00 mold limit). The majority of the claim was denied because, according to AHAC, the damage was caused by improper construction. Mr. Sebo later filed suit against multiple defendants, including the sellers of the property, the architect who designed the residence, the construction company that built the residence, and AHAC. After Mr. Sebo settled out with the other defendants, trial proceeded against only AHAC. The jury ultimately found in favor of Sebo. AHAC appealed the judgment, and the Second District reversed and remanded for a new trial. According to the Second District, when multiple perils – some covered, some excluded – combine to create one loss, causation should be examined under the efficient proximate cause theory, not the concurrent cause doctrine. On secondary appeal, the Florida Supreme Court reversed, concluding that “when independent perils converge and no single cause can be considered the sole or proximate cause, it is appropriate to apply the concurring cause doctrine.” The Court examined the two disparate theories, favoring the conclusion previously reached by the Third District in Wallach v. Rosenberg (“[w]here weather perils combine with human negligence to cause a loss, it seems logical and reasonable to find the loss covered by an all-risk policy even if one of the causes is excluded from coverage.”). According to the court, if AHAC wished to avoid the application of the concurrent cause doctrine, it could have done so within the policy, as it had done in other sections. Thus, since there was no dispute that the rainwater and hurricane winds combined with the defective construction to cause the damage to the Sebo property, and the policy did not preclude the application of the concurrent cause doctrine, the loss was covered. Add to Flipboard Magazine.
From 1999 to 2008, a registered investment representative worked for Hantz Financial Services (“Hantz”). From 2000 to 2008, that same representative embezzled client funds. In March 2008, a client filed a FINRA arbitration demand against the representative and Hantz. The representative committed suicide days later, and thereafter, Hantz’s investigation revealed the extent of the representative’s embezzlement. In July 2009, Hantz settled the customer’s claim that prompted its investigation. By that same time, Hantz had also settled twenty other client claims without litigation. Another client pursued FINRA arbitration against Hantz. In that matter, FINRA issued a July 2009 award, which a Michigan trial court confirmed in December 2010, and an appellate court affirmed in January 2012. In May 2008, Hantz tendered a proof of loss to National Union Insurance Company, its fidelity bond company. The bond, effective for the period January 26, 2008 to January 26, 2009, provided indemnity for “loss resulting directly from dishonest or fraudulent acts committed by an Employee acting alone or in collusion with others.” With respect to litigation losses, the bond imposed a twenty-four month period from the date of a “final judgment or settlement” to sue National Union to recover such losses. National Union investigated Hantz’s claim until March 2011, when it disclaimed coverage. In March 2013, Hantz sued National Union for breach of contract and statutory penalties under Michigan law. The District Court granted National Union’s summary judgment motion, finding that Hantz’s claim were not “direct losses” covered by the bond. The Sixth Circuit affirmed but on the alternative ground that Hantz had failed to sue National Union in the twenty-four month limitation period. The Sixth Circuit noted that there was no dispute that the limitations period applied to all claims settled by July 2009. With respect to the FINRA arbitration award, which was confirmed by a judgment in December 2010, the court rejected Hantz’s arguments that a final judgment had not been entered until January 2012 when the appellate court affirmed the trial court’s judgment. In rejecting Hantz’s argument, the Sixth Circuit applied the Michigan rule of construction that when a policy employs a legal term of art, the term is given its legal meaning. In this case, that meant that “final judgment” meant a judgment entered by a trial court. The Sixth Circuit also rejected Hantz’s estoppel/waiver argument, noting that throughout its two and a half year claim investigation, National Union repeatedly reserved its rights to deny coverage. Accordingly, the Sixth Circuit affirmed the District Court’s Order, holding that National Union did not have to pay first party benefits to Hantz under the fidelity bond. Hantz Financial Services v. American International Specialty Lines Insurance Co., No. 15-2237, 2016 U.S. App. LEXIS 20352 (6th Cir. Mich. Nov. 9, 2016). Add to Flipboard Magazine.
In its recent decision in Johnson v. GeoVera Specialty Ins. Co., No. 15-30803, 2016 U.S. App. LEXIS 17530 (5th Cir. September 27, 2016), the United States Court of Appeals for the Fifth Circuit explored whether or not certain alleged breaches of a policy’s “cooperation clauses” precluded policy coverage. GeoVera insured Johnson under a homeowner’s insurance policy. Johnson’s house sustained windstorm damage in a hurricane. Johnson’s house sustained fire damage in a separate event nearly two years later. Johnson sought coverage for both losses. GeoVera, alleging that Johnson violated the policy’s “cooperation” clauses, denied coverage. GeoVera’s policy imposed the following duties of cooperation on Johnson: (1) “cooperate with GeoVera in the investigation of a claim,” (2) “prepare an inventory of damaged personal property showing the quantity, description, actual cash value and amount of loss,” (3) “attach all bills, receipts and related documents that justify the figures in the inventory,” (4) “show the damaged property as often as GeoVera reasonably required,” (5) “provide GeoVera with requested records and documents,” and (6) “submit to examination under oath.” The policy provided that GeoVera would owe no coverage if Johnson’s breach of any cooperation duty prejudiced GeoVera. The Court found Johnson in violation of numerous cooperation duties. Johnson invoked her contractual appraisal right under GeoVera’s policy, but demolished and remodeled a significant portion of the house before GeoVera could conduct its appraisal. Johnson “almost completely gutted the interior, performed extensive framing repairs, and then terminated the appraisal process.” GeoVera, after invoking its own contractual appraisal right, subsequently requested that Johnson produce “several videos and thousands of photos of the fire damage” known to be in Johnson’s possession. Johnson refused to provide the requested videos and photographs until well after the coverage litigation had commenced. Johnson refused to testify under oath regarding the incident until over a year following the loss. Johnson further refused to provide documentation justifying the figures in her proof-of-loss list. The Court concluded that Johnson had clearly not complied with Johnson’s cooperation duties under GeoVera’s policy. The Court further held that Johnson’s non-compliance had prejudiced GeoVera. The Court held that noncompliance prejudices an insurer when an insured’s noncompliance frustrates two basic purposes of a policy’s cooperation clause: (1) “to enable the insurer to obtain relevant information concerning the loss while the information is fresh,” and (2) “to protect the insurer against fraud, by permitting it to probe into the circumstances of the loss.” The Court identified several manifestations of prejudice against GeoVera. Johnson, in “significantly altering the state of [her] house before GeoVera’s agent could appraise it,” precluded GeoVera from accurately assessing the economic magnitude of the claimed fire damage. Johnson, by significantly delaying submission of probative videos and photographs depicting the claimed damage, forced GeoVera to “engage in an unorthodox, more expensive inspection process.” Johnson also prejudiced GeoVera by initially refusing to submit to examination under oath, because Johnson’s significant delay “caused Johnson to forget information vital to protect GeoVera from fraud during the claims process.” The Court concluded that Johnson failed to comply with her duty to cooperate under GeoVera’s policy, and that Johnson’s noncompliance had prejudiced GeoVera. The Court accordingly denied coverage. Add to Flipboard Magazine.
As the East Coast heads into hurricane season, the Second Circuit issued a timely decision in National Railroad Passenger Corp. v. Aspen Specialty Insurance Cor., 2016 U.S. App. LEXIS 16704 (2d Cir. Aug. 31, 2016). Amtrak sued its insurers seeking to recover $675 million in insurance for damage caused by the flooding of Amtrak’s Hudson and East River tunnels after Superstorm Sandy. The District Court (Hon. Jed S. Rakoff) held that Amtrak was only entitled to recover its $125 million sublimit – nothing more. The Second Circuit largely affirmed District Court’s ruling, but did rule that Amtrak may eventually seek to recover another $125 million in Demolition and Increased Cost of Construction (“DICC”) coverage. The Second Circuit therefore remanded Amtrak’s DICC coverage claim. On appeal, Amtrak made three arguments that it should recover insurance in addition to the $125 million flood sublimit. First, Amtrak argued that its damages were not caused by a “flood” under its policies’ definition of that term. Amtrak conceded that its damages did fall within the definition of “flood” in one policy that expressly included the terms “sea surge” and “wind driven water” in its definition of “flood.” But Amtrak argued that, by distinction, its damages did not fall within the definition of “flood” in the remaining policies, which did not include those terms in their “flood” definitions. The Second Circuit dismissed this argument, holding that other policies’ definitions of “flood” were broad enough to encompass the inundation of sea water resulting from Sandy’s storm surge. Second, Amtrak argued that its damages constituted a covered “ensuing loss” because the corrosion of its metal equipment was caused by a “chloride attack” that occurred after Amtrak had pumped the seawater out of its tunnels. The Second Circuit also dismissed this argument, positing that Amtrak’s broad interpretation of the ensuing loss exception would swallow the flood sub-limit whole. The court held that Amtrak could not separate the water damage from the corrosion of the metal equipment or establish that the corrosion was caused by a “covered peril” to bring its claim within the “ensuing loss” coverage. Third, Amtrak argued that the District Court erred in dismissing its claim DICC coverage to replace undamaged portions of the flooded tunnels required by government agencies. The Second Circuit agreed with Amtrak, holding that the lower court’s order on this issue was premature. The Second Circuit noted that Amtrak had not yet submitted its repair plans to the Federal Railroad Administration (“FRA”) and therefore did not know what changes, if any, the FRA would require Amtrak to make to undamaged portions of the tunnels. The Second Court stated that if the FRA requires Amtrak “to replace undamaged portions of its tunnels – and a covered peril caused the FRA to issue such a directive – Amtrak should be able to file a claim with its insurers seeking DICC coverage.” The Second Circuit did not address whether the flood and DICC sub-limits could be stacked, which creates another potential obstacle to Amtrak’s recovery efforts. Add to Flipboard Magazine.
In Tower Hill Signature Ins. v. Speck, 2016 Fla. App. LEXIS 12167 (Fla. Dist. Ct. App. 5th Dist. Aug. 12, 2016), the Fifth District found the trial court abused its discretion by not admitting into evidence the amount of a prior insurance settlement. In 2010, the Specks reported a sinkhole claim to Tower Hill. After an initial investigation, Tower Hill refused to pay the claim and rescinded the Specks’ policy, alleging that the home had unrepaired pre-existing damage at the time the policy was issued. The Specks then sued Tower Hill for breach of contract. Nine years earlier, in 2001, the Specks reported a sinkhole claim to their prior insurance carrier, claiming the residence to be a total loss. An engineer retained by the Specks recommended $166,000.00 in below-ground repairs and their lawyer claimed an additional $64,000.00 would be necessary for above-ground repairs. The claim was eventually settled for $260,000.00. Of the $260,000.00 settlement, the Specks spent only $15,000.00 on repairs to the home. The remainder paid off two mortgages and the Specks’ public adjuster. At the trial of the Specks’ 2010 claim, Tower Hill sought to establish that the prior sinkhole damage had not been repaired. In support of this defense, Tower Hill proffered testimony from Larry Speck regarding the prior settlement and the amount of subsequent repairs. However, the trial court excluded testimony about the $260,000.00 settlement as irrelevant under Florida Statute § 90.401. Ultimately, the jury found Tower Hill liable for breach of contract and awarded the Specks $164,080.00. On appeal the Fifth District reversed, finding that, while the amount of a settlement for a prior injury is generally irrelevant, it may be relevant when it speaks to an element of the plaintiff’s claim; such as whether some or all of the claimed damages pre-existed the event allegedly giving rise to liability. The appellate court found the settlement amount was relevant because the disparity between the amount of the settlement and the amount actually spent on repairs made Tower Hill’s defense (that there was prior unrepaired damage to the home when the Specks signed the insurance application) more probable. The disparity also made the Specks’ argument (that their home was completely repaired) less probable. Nevertheless, the Specks argued that evidence of the settlement amount was properly excluded as duplicative, confusing, and prejudicial. The Fifth District rejected these arguments, finding the amount of the settlement was not duplicative because “[t]he sheer size of the disparity between the two figures tends to prove that the Specks did not repair all of the original damage.” Further, the settlement amount was directly relevant to the issue of whether the Specks misrepresented to Tower Hill that there was no unrepaired damage to their property prior to signing the insurance application, and therefore outweighed any risk of confusion or prejudice. Since the settlement amount went directly to Tower Hill’s liability under the contract, the Court vacated the final judgment against Tower Hill and remanded the case for a new trial. Add to Flipboard Magazine.
In Hsu v. Safeco Ins. Co. of Ind., 2016 U.S. Dist. LEXIS 12407 (11th Cir. 2016), the Eleventh Circuit affirmed summary judgment in favor of Safeco Insurance Company of Indiana (“Safeco”), finding that the homeowner breached the contract of insurance. Safeco insured the plaintiffs under a homeowner’s policy, which included a Valuable Articles Schedule that listed six items of jewelry. Several months after Safeco issued the policy, there was a reported burglary at the insureds’ home and, as a result, several items went missing. The homeowners reported the claim to Safeco, asserting that nearly $295,000 in jewelry and $13,000 in personal property had been damaged or stolen. Safeco investigated the claim and sought production of various documents from the homeowners regarding their financial condition. While Safeco’s investigation was pending, the homeowners filed suit, seeking to recover under policy. Safeco sought summary judgment on the grounds that the homeowners ignored repeated requests for the production of additional material information concerning their financial condition and, therefore, violated the terms of the policy which required them to comply with all terms and conditions before filing suit. The District Court for the Northern District of Georgia agreed, finding that the homeowners were barred from recovery because they failed to cooperate with their insurer in its investigation and resolution of the claim, as required by the policy, due to their failure to produce certain federal income tax returns. On appeal, the homeowners argued that the district court erred in entering summary judgment because there was a genuine issue as to whether they acted in good faith in producing certain tax returns in their possession and authorizing Safeco to obtain tax returns directly from the IRS. The homeowners also argued that Safeco failed to act with diligence and in good faith by failing to procure the requested documents. The Eleventh Circuit affirmed the district court’s order. Applying Georgia law, the Court explained that “an insurer may require its insured to abide by the terms of his policy and cooperate with the insurer’s investigation as a precondition to recovery” … and “an insured’s failure to provide any material information called for under the policy constitutes a breach of the contract.” Id. at *3 (quotations and citations omitted). Where documents are unavailable, the insured has a duty to cooperate with the insurer to obtain or reconstruct the information from other available sources. Id. The Eleventh Circuit explained that Safeco diligently sought to obtain the requested documents, yet the homeowners failed to cooperate. Specifically, during its investigation, Safeco requested the insureds’ income tax records, including all worksheets and scheduled. The insureds failed to provide the requested documentation and, instead, provided Safeco with a written authorization to permit Safeco to retrieve the documents directly from the IRS. Safeco attempted to retrieve the tax returns from the IRS, but the records were sent to the homeowners, instead of Safeco. Safeco sent several letters to the homeowners, asking them to forward copies of the tax records; however, its requests went unanswered. The homeowners offered no explanation for their failure to respond. Relying on Allstate Insurance Company v. Hamler, 247 Ga. App. 574 (Ga. Ct. App. 2001), the Eleventh Circuit agreed with the district court, finding that the homeowners breached their insurance contract as a matter of law due to their failure to produce the requested income tax returns and otherwise cooperate with Safeco in its investigation and resolution of the claim. Add to Flipboard Magazine.
Tesoro Refining & Marketing Co. v. National Union Fire Ins. Co. of Pittsburgh, PA, 2016 U.S. App. LEXIS 13838 (5th Cir. July 29, 2016). In 2003, Tesoro Refining and Marketing Company, LLC (“Tesoro”) started selling fuel to Enmex Corporation (“Enmex”). Tesoro sold the fuel on credit and without security, subject to a $25 million credit limit. In 2007, Tesoro’s auditors questioned Tesoro’s Credit Director about Enmex’s $45 million balance, and he indicated that Enmex’s account was secured by a $12 million letter of credit. Days later, he produced a false letter of credit. (Tesoro’s Credit Director denied creating the false documents). The next month, the Credit Director provided another false letter of credit to Tesoro’s auditors. And in May 2008, he provided a false security agreement to Tesoro’s auditors. In December 2008, Enmex’s balance had increased to $90 million, prompting Tesoro’s Risk Management Officer to request the letters of credit. When they were presented to the issuing bank, they were denied as invalid. Tesoro sued Enmex for breach of contract and fraud. After settling that suit, Tesoro made a claim for “Employee Theft” under a Commercial Crime Policy it had purchased from National Union Fire Insurance Company of Pittsburgh, PA (“AIG”). AIG denied the claim, and Tesoro filed suit. The AIG Policy’s “Employee Theft” insuring agreement paid for loss of: “‘other property’ resulting directly from ‘theft’ committed by an ‘employee’. . . .” The insuring agreement also stated that, “[f]or purposes of this Insuring Agreement, ‘theft’ shall also include forgery.” The AIG Policy defined “theft” to mean “the unlawful taking of property to the deprivation of the insured.” Tesoro first argued that to bring its claim within the Insuring Agreement, it only had to establish a “forgery,” and did not have to establish a “theft” through forgery. The Fifth Circuit rejected this argument, holding that when read in context, the Employee Theft coverage clearly required a forgery leading to theft to trigger the insurance. The Fifth Circuit then turned to Tesoro’s alternative argument that the Credit Director’s alleged forgeries constituted theft by deception, which would constitute a covered unlawful taking. Under Texas law, theft by deception requires showings that a deceptive representation was a substantial or material factor in inducing the property owner to transfer the property, and that if the property owner been aware of the truth, he would have acted differently. The Fifth Circuit held that Tesoro had failed to make either showing. First, the court noted that Tesoro did not produce any evidence that the Credit Director’s actions “affected its decision to continue selling fuel to Enmex,” i.e., Tesoro never presented evidence “that absent the forged documents the sales would not have occurred.” Second, the court held that “Tesoro failed to offer any evidence that it would have acted differently had it known that the Enmex account was actually not secured,” i.e., because Tesoro continued to sell Enmex fuel when it actually knew the account was unsecured, it failed to present evidence that it would have acted differently. Correspondingly, the Fifth Circuit concluded that there was no coverage available Add to Flipboard Magazine.
In Dufour v. Progressive Classic Ins. Co., 2016 WI 59 (Wis. 2016), Dairyland Insurance Company’s insured sustained physical injuries and damage to his vehicle following an automobile accident with an underinsured tortfeasor. The Dairyland Policy was subject to limits of $100,000 for bodily injury and $40,000 for property damage. The insured sustained injuries requiring treatment in excess of $200,000. Dairyland paid its insured the $100,000 bodily injury limit and a payment of $15,559 in connection with damage to the insured’s vehicle. The insured also received $100,000 from the tortfeasor’s insurer, American Standard. Dairyland sought and obtained a subrogation recovery from American Standard for the $15,559 Dairyland paid to its insured as a result of the conduct of American Standard’s insured. Dairyland’s insured, however, filed a lawsuit against Dairyland to recover the money Dairyland recovered from American Standard. In support of this claim, the insured argued that he was not “made whole” by Dairyland or American Standard because his medical expenses relating to the accident exceeded the amount he recovered from insurance. The insured further argued that Dairyland acted in bad faith by not tendering the funds acquired from the subrogation claim to him. The Wisconsin Supreme Court engaged in a detailed analysis of the “made whole” doctrine. According to the court, the made whole doctrine generally precludes an insurer from acquiring subrogation payments until the insured has been made whole. In other words, an insured is not made whole (and an insurer has no subrogation rights) until the insured has been fully compensated for all of his or her damages. The court held, however, that this rule does not always preclude an insurer from obtaining subrogation benefits, but rather is only applied when the doctrine yields an equitable result. The court concluded that the made whole doctrine did not apply, and Dairyland was entitled to the subrogation proceeds, because the insured received “every dollar to which [he] was entitled under his contract of insurance with Dairyland.” Specifically, the court held that “preventing an insurer from pursuing its subrogation claim for property damage payments under circumstances such as presented herein would not solve the problem of underinsurance for personal injuries.” Add to Flipboard Magazine.
In Certain Underwriters at Lloyd’s London v. Jimenez, 2016 Fla. App. LEXIS 9231 (Fla. Dist. Ct. App. 3d Dist. June 12, 2016), the Third District reversed a trial court’s final judgment and remanded the case with instructions to enter judgment in favor of the insurer due to a material misrepresentation in the application. In 2007, Raul Jimenez, on behalf of he and his wife, completed and executed an application for homeowner’s insurance which covered their 1985 residence. The application was submitted through an insurance agent and the agent explained that by signing the “Applicant’s Application Statement,” Mr. Jimenez warranted that the information provided was true, complete, and was being offered as a condition to issue the policy. In the application, Mr. Jimenez stated that he had a monitored central station burglary alarm on his property that also monitored smoke and temperature. Mr. Jimenez reiterated this representation in subsequent policy years; specifically providing written confirmation in 2009 that the property and risk were as stated in the 2007 application. The policy included a Protection Device Endorsement provision, stating that the discounted premium reflected the submission that there was a central station alarm present on the property. As a condition of the insurance, the Jimenezes were required to maintain all fire alarms, security systems, and physical protection devices identified in their application in good working order. Failure to comply with this condition would render the insurance null and void. In August 2009, there was a kitchen fire at the Jimenez’s home. Lloyd’s filed a two-count complaint. In count I, Lloyd’s sought declaratory relief, claiming that the policy did not provide coverage for the fire based on the language of the Protection Device Endorsement. And in count II, Lloyd’s alternatively sought rescission of the policy due to material misrepresentations in the application. The Jimenezes answered and counterclaimed seeking to obtain coverage. At trial, the president of Lloyd’s managing general agent testified the representation that the property had central station monitored smoke and temperature alarms was material to the risk; he also testified that he would not have accepted the risk if he had known the Jimenezes did not have a central station monitored smoke and temperature alarm. Additionally, a corporate representative for Delta Alarm Systems testified that the Jimenezes had a burglar alarm, but not a central station monitored smoke or temperature alarm. Further, an insurance expert testified that the existence of protection device systems is material to a risk for two reasons: first, the possession of these types of alarms often creates a discount in the rating; and second, these protection devices are important to a “cutoff” test for homes of a particular age. Because the home was 22-years-old at the time of the application, Lloyd’s contended that such proximity to its cutoff age (25 years) would lead its underwriters to look for positive features – such as a monitored alarm – to determine acceptance of the risk. Although the trial court found in favor of the Jimenezes, the Third District reversed. It agreed with Lloyd’s that the Jimenez’s misrepresentations about the presence of a central monitored system were material as a matter of law to the issuance of the policy, and therefore, Florida Statute 627.409(1) prevented recovery under the policy. Additionally, the Third District found that the trial court erred in denying Lloyd’s entitlement to rescind the policy because the lack of a central monitored system was material to issuance of the policy and was relied upon. Add to Flipboard Magazine.