American Home Assurance Co. v. Ingeneri: Misrepresentations in Insurance Applications

In American Home Assurance Co. v. Ingeneri, the Maine Supreme Judicial Court, sitting as the Law Court, addressed the issue of when an incorrect response to a question on an insurance application constitutes a sufficient misrepresentation to render the policy voidable under Maine law. Reversing the trial court, the Law Court held that to render the policy voidable, the applicable statutory provision required the insurer to prove that the insured's misrepresentation was fraudulent, material to the insured risk, and actually relied upon by the insurer. The Law Court determined that the word "or" in the misrepresentation statute should be read to mean "and," thus requiring an insurer to prove all three elements. Although the Law Court reached the correct result in Ingeneri, there are two problems with the decision. First, by reading a statute which clearly uses the disjunctive "or" to mean "and," the Law Court creates uncertainty as to whether statutes really mean what they appear to say. There is an alternative construction available which achieves the result of Ingeneri without contorting the words of the statute. Second, by requiring that an insurer prove all three elements—fraud, materiality, and reliance—to establish misrepresentation, the court may have given the insured more protection than was intended by the Legislature.