Insurance Law

Susan Ford Robertson, Esquire

In rescission action, automatic termination clause in Golden Rule Insurance Company’s health insurance clause was found ambiguous but ambiguity was not relevant to provisions upon which the insurance company sought rescission—judgment in favor of insured’s reversed.  Judgment was affirmed in favor of insureds with respect to PacifiCare Life and Health Insurance Company’s claim for rescission based on alleged misrepresentation of residency. Golden Rule Ins. Co. v. R.S., et al., No. 72578. (Mo. App. W.D., June 19, 2012), Mitchell, P.J.

Golden Rule Insurance Company sought rescission of two policies of health insurance under an automatic termination clause that voided the policies 90 days after issuance if the insured’s had other individual coverage in effect. The insured’s argued that the policies contained an ambiguity in seemingly prohibiting other insurance in one place and explicitly contemplating the existence of certain other types of insurance. PacifiCare sought rescission alleging a material misrepresentation of the insured’s residency arguing that home residency was the same as domicile. The trial court entered judgment in favor of the insureds.

Held: Reversed in part. 
As to Golden Rule--the appellate court found that though there was ambiguity in the policy provisions, construing the ambiguity in favor of coverage only permitted insured’s to have other insurance that was in the form of group or group-type insurance and not the individual policies that were purchased and held by the insureds. Judgment in favor of the insureds was reversed. As to PacifiCare, the appellate court found no material misrepresentation of the insured’s residency finding that policy asked for home address, a term undefined by the policy. The court used a definition of home address that equated to a person’s residence, instead of domicile, and found that substantial evidence existed to support the trial court’s judgment that the insureds maintained dual residencies.