Insurer not entitled to rescind home insurance policy

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The failure to disclose true value in a real estate insurance context doesn’t give rise to a rescission claim, the Indiana Court of Appeals held in a case of first impression.

In Jerry French, et al. v. State Farm Fire & Casualty Company, No. 18A02-1005-PL-489, both parties appealed the denial of their motions for summary judgment in a dispute over whether State Farm Fire & Casualty Co. would have to pay for the Frenches’ stick-built home under the insurance policy that covers the “reasonable and necessary cost” of replacing their home with one of “similar construction” after their manufactured home burned.

When Jerry French obtained insurance on the manufactured home, the independent insurance agent never asked if the home was manufactured or how much the home cost. The agent assumed it was a stick-built home because French said the home was “under construction.” The replacement cost of the home under the policy was $173,200; the Frenches’ manufactured home cost nearly $77,000.

The home was destroyed by a fire and the Frenches decided to build a stick-built home on the site at a cost of more than $180,000. State Farm only offered to pay the cost of replacing the manufactured home with the same model. The Frenches sued for breach of insurance policy, and the trial court denied both parties’ motions for summary judgment.

The appellate judges found the policy was ambiguous when it came to the use of the terms “similar construction” and “reasonable and necessary cost,” and affirmed the denial of summary judgment for both parties on the question of whether the policy terms covered the cost of replacing the manufactured home with a stick-built one.

State Farm argued that it’s entitled to reformation of the policy based on a mutual mistake of fact, and rescission of the policy based on concealment of material facts by the Frenches. On the reformation issue, the judges remanded with instructions to enter summary judgment in favor the Frenches, because there’s no evidence that the Frenches were mistaken regarding the true value or nature of the manufactured home. Regarding the rescission of the insurance contract based on the concealment of the purchase price, or the fact it was a manufactured home, the judges noted that no Indiana case has squarely addressed the question of whether failure to disclose a material fact leads to the same result as a misrepresentation.

The appellate court looked at foreign cases involving the failure to disclose the value of insured real estate and cases involving the failure to disclose the value of insured property. In the real estate cases, those courts held that failure to disclose true value in a real estate insurance context doesn’t give rise to a rescission claim. Courts have held that not disclosing the value of insured property – such as art objects – is grounds for voiding the policy.

Judge Cale Bradford pointed out that in the real estate cases, the insurance company didn’t inspect the property in question before issuing coverage, which is what happened in the instant case.  

“… it would have been a simple matter for a State Farm agent to visit the Frenches’ home, at which point it would have been immediately apparent that it was a manufactured home, even without going inside. In contrast, the true value of personal property, such as an art collection, would be much more difficult for the insurer to ascertain,” he wrote. “We do not think it is an unreasonable rule that insurance companies fail to ascertain the true value of insured real property at their peril, as they are in a far better position to accurately ascertain that value than most homeowners.”

The judges ordered summary judgment be entered in favor of the Frenches on this claim. They also denied awarding attorney fees and prejudgment interest to the Frenches. At trial, they may argue that additional living expenses pursuant to their insurance policy were reasonable and necessary costs of replacing their original home with one of similar construction.


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  1. I have an open CHINS case I failed a urine screen I have since got clean completed IOP classes now in after care passed home inspection my x sister in law has my children I still don't even have unsupervised when I have been clean for over 4 months my x sister wants to keep the lids for good n has my case working with her I just discovered n have proof that at one of my hearing dcs case worker stated in court to the judge that a screen was dirty which caused me not to have unsupervised this was at the beginning two weeks after my initial screen I thought the weed could have still been in my system was upset because they were suppose to check levels n see if it was going down since this was only a few weeks after initial instead they said dirty I recently requested all of my screens from redwood because I take prescriptions that will show up n I was having my doctor look at levels to verify that matched what I was prescripted because dcs case worker accused me of abuseing when I got my screens I found out that screen I took that dcs case worker stated in court to judge that caused me to not get granted unsupervised was actually negative what can I do about this this is a serious issue saying a parent failed a screen in court to judge when they didn't please advise

  2. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  3. Paul Hartman of Burbank, Oh who is helping Sister Fuller with this Con Artist Kevin Bart McCarthy scares Sister Joseph Therese, Patricia Ann Fuller very much that McCarthy will try and hurt Patricia Ann Fuller and Paul Hartman of Burbank, Oh or any member of his family. Sister is very, very scared, (YES, I AM) This McCarthy guy is a real, real CON MAN and crook. I try to totall flatter Kevin Bart McCARTHY to keep him from hurting my best friends in this world which are Carolyn Rose and Paul Hartman. I Live in total fear of this man Kevin Bart McCarthy and try to praise him as a good man to keep us ALL from his bad deeds. This man could easy have some one cause us a very bad disability. You have to PRAISAE in order TO PROTECT yourself. He lies and makes up stories about people and then tries to steal if THEY OWN THRU THE COURTS A SPECIAL DEVOTION TO PROTECT, EX> Our Lady of America DEVOTION. EVERYONE who reads this, PLEASE BE CAREFUL of Kevin Bart McCarthy of Indianapolis, IN My Phone No. IS 419-435-3838.

  4. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

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