SW Legal Educational Publishing

Marine Insurance Rescission Allowed Due to Concealment of Loss History
Description Due to concealment, appeals court upheld rescission of marine insurance issued for yacht that sank on maiden voyage. Yacht was purchased by company owned by person who had long history of unrevealed yacht losses and multiple other insurance claims.
Topic Insurance
Key Words Marine Insurance, Failure to Disclose, Fraud, Rescission
C A S E   S U M M A R Y
Facts DeGeorges, a Beverly Hills attorney, lost a series of yachts at sea over the years, all fully insured, plus he had 29 other insured losses over 14 years. Through a company he owned, DeGeorge bought a new yacht and insurance on the yacht. When DeGeorges took the yacht on its maiden voyage, it immediately sank, by attacking drug runners, DeGeorges claimed. The insurer refused to pay $6.5 million because the parties failed to disclose material facts, such as DeGeorge's loss record or relationship to the company that bought the yacht. District court granted summary judgment for insurer. DeGeorges appealed.
Decision Affirmed. The district court had evidence to find fraud in intentional concealment from insurer of material facts to allow rescission of the marine insurance. Even if fraud was not proven, there was evidence of concealment that would allow rescission. "An applicant for a marine insurance policy is bound to reveal every fact within his knowledge that is material to the risk."
Citation Cigna Property and Casualty Insurance Co. v. Polaris Pictures Corp., --F.3d-- (1998 WL 734391, 9th Cir.)
159 F.3d 412 (9th Cir., 1998)

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