Insurance coverage denied to family of badly burned child after grandfather's misrepresentation

The Court of Appeals has interpreted a Home Owners Insurance Company (a subsidiary of AutoOwners Insurance) policy to deny coverage to a child badly burned at a family Christmas celebration in 2004.  The 16 month-old child apparently was scalded when he pulled a coffee pot over on himself at his grandparents' home.  Home Owners argued the policy was voided because during its investigation of the incident, the grandfather allegedly made false statements to the insurer in an attempt to secure coverage.

Representatives of the injured child and the grandmother argued that any mis-statement made by the grandfather should not invalidate the coverage afforded to the child and to the insured grandmother.  The trial court agreed and voided the grandfather's coverage, only.  The Court of Appeals reversed, holding that under the terms of the Home Owners' policy, a false statement by "any insured" is enough to void the policy in its entirety, regardless of the relevance of the statements.

Because the Court did not provide any detail about the grandfather's allegedly fraudulent statement, it is impossible to know whether the insurer was actually injured by a significant mis-statement, or whether the insurer was allowed to evade a purchased obligation, based on a policy loophole.  In either event, it would appear that the Court's decision denying the infant and the allegedly negligent grandmother the benefit of the coverage Home Owners sold, is overly broad and punitive to the innocent child.