On May 25, 2007, the Appeals Court of Massachusetts ruled that an insurance company could not revoke a policy on the grounds of misrepresentation on the part of a policyholder, finding that the insured had no duty to volunteer information about changed circumstances absent a specific request from the insurer. The case, Quincy Mutual Fire Insurance Co. vs. Quisset Properties, Inc. and others, Ellen Engelhardt, intervener (69 Mass. App. Ct. 147; 866 N.E.2d 966), was argued by Neil Sugarman and Benjamin R. Zimmermann of the Boston law firm Sugarman and Sugarman, PC, on behalf of Ellen Engelhardt.

On July 26, 2003, State Trooper Ellen Engelhardt suffered catastrophic injuries when a 1991 Volvo driven by 18-year-old William Senne veered into the breakdown lane on Route 25 in Wareham, MA, and struck her parked cruiser at nearly 100 miles per hour. Trooper Engelhardt, a 22-year veteran of the police force, received traumatic brain injuries rendering her incapable of walking, talking, or eating on her own. She resides in a rehabilitation facility in Massachusetts. Guardians acting on her behalf filed a claim against Senne’s insurer for bodily injuries, citing her need for long-term care.

The vehicle was insured under a commercial automobile insurance policy in the name of Quisset Properties, Inc., a buiness owned by William Senne’s father, Peter Senne. Although the business had been involuntarily dissolved in 1999, Peter Semme failed to notify Quincy Mutual or its agent, Fair & Yeager Insurance Agency, Inc., of the change in circumstances, while continuing to renew the policy annually and paying the premiums. Referring to Massachusetts General Laws, c. 175, § 186 in his summary judgment of November 20, 2003, Norfolk Superior Court Judge Patrick F. Brady ruled that the insurer was not obligated to pay out claims on behalf of Trooper Engelhardt under the bodily injuries provisions of the insurance policy because Peter Senne’s failure to inform the insurer of the changes in circumstances constituted “material misrepresentations.”

In its review of the case, the Appeals Court focused on the question as to which party actually had the obligation to either obtain or furnish relevant information. In its written decision, the Court noted that, “The insurer sets the parameters of the negotiation, deciding those risks that it wishes to insure and those that it does not. Unless the insurer advises the insured of matters that are important to it in the ‘negotiation’ of the policy … how is an insured to know what is important or increases the risk of loss? We doubt that the Legislature intended to make insureds de facto underwriters who risk forfeiture of coverage for failing to identify an volunteer changed circumstances that might increase the risk of loss to the insurer. The insured’s silence is not a ‘misrepresentation’ because the insurer is in the best position to ask for information that bears on its decision to insure.”

In support of its conclusion, the Appeals Court cited several previous cases outside Massachusetts as well as recognized insurance treatises that hold the insurer responsible for identifying and requesting information relevant to the issuance or renewal of a policy.

Since neither Quincy Mutual nor its agent Fair & Yeager had directly and specifically asked Peter Senne questions relating to the continued existence of Quisset Properties at any point in the renewal process, and since the policy as written did not impose a duty of disclosure on the insured, the Court ruled that the insurer was not released from its obligation to honor the terms of the policy. On July 30, 2007, the Supreme Judicial Court denied further review of this ruling. Trooper Engelhardt is now able to pursue the $1,000,000 in coverage to which she is entitled.

In handing down its decision, the Appeals Court has set a binding precedent protecting consumers from an unjustified denial of coverage and further clarifying the obligation of insurers to assume the burden of inquiry when issuing or renewing its policies.

“Whenever there is a conflict between an insurance company and its automobile policyholder, the company has the upper hand.  This case evens the playing field and places the burden upon the insurance company and, where appropriate,  the insurance agency soliciting the coverage, to expressly ask the policyholder to provide whatever detailed information is necessary affecting the policy coverage.”  Neil Sugarman

Sugarman, established in 1967, is the largest personal injury law firm in Massachusetts. Recognized for its leadership in law, advocacy, and education, the firm handles a range of civil litigation, including medical malpractice, premises and product liability, construction site accidents, fire and explosion litigation, and motor vehicle accidents. Many of the firm’s cases have established important legal precedents at the appellate level.