Filed Under:Agent Broker, Coverage Issues

False Statement Voids Policy

A fiscal agent secures insurance through lies about losses and cancellation

Knowing that a company could not buy insurance for its business personal property because of a serious and extensive loss history, its fiscal agent (appointed by a court at the request of a lender after the owners defaulted on loans) lied on an insurance application and claimed no losses on an application. In Grande Leather and Fur LLC, New Wave Leather Products LLC v. Edward P. Bond, CPA, As Fiscal Agent, No. A-3854-08T3 (N.J.Super.App.Div. 05/04/2011), the trial court and the appellate division agreed with the insurers and affirmed the voidance of the contract. This teaches that false statements on an application will allow an insurer to void coverage if the misrepresentations are material.

Grande Leather and Fur, New Wave Leather Products, Grande Industries, Vincent Grande and Kim Grande (insureds) appealed orders of summary judgment entered against them and in favor of defendants Edward P. Bond, CPA, and underwriters at Lloyd’s and Pacific Insurance.

The completed application was sent by the Lobosco Agency to Continental Marmorstein & Malone, which acted as agent for Lloyd’s and Pacific. Following an underwriting review by an assistant vice president employed by Continental, Ellen Sopko, coverage was bound, effective June 16, 2005, to Dec. 16, 2005, with Lloyd’s assuming 70 percent of the risk and Pacific assuming 30 percent. The policies of the two companies, which were identical, contained the following language:


Following the denial of coverage, on April 19, 2007, Lobosco wrote to Continental seeking a refund of the premiums paid for coverage. The carriers agreed and cancelled the policy effective as of the date of issuance, June 16, 2005. On April 25, 2007, Bond executed a policy release statement, which provided:

The undersigned agrees that the above-referenced policy is lost, destroyed or being retained. No claims of any type will be made against the Insurance Company, its agents or its representatives under this policy for losses which occur after the date of cancellation shown above[.]

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