Carriers typically argue against divulging information pertaining to the underwriting of a particular risk and/or company underwriting standards or guidelines.1 I believe the information should be provided to the insured, and so too says a Middle District of Florida trial court.2

In the Blocker case, Blocker maintained a commercial general liability (“CGL”) policy with Tower Insurance. Blocker was sued by a third party named Guzman. Blocker asked Tower Insurance to provide him with a defense in the Guzman suit pursuant to the CGL policy. Tower Insurance said “nope, sorry” and sued Blocker. Count II of Tower Insurance’s complaint argued that it did not owe Blocker a defense (or indemnity, ultimately) due to his alleged insurance application misrepresentations concerning the subject property’s crime history. Put differently, Count II argued that Tower Insurance would not have issued the policy to Blocker but for Blocker’s alleged misrepresentations and, thus, should not have to live up to its contractual obligations. Naturally, then, Blocker was interested in learning whether or not Tower Insurance was truly duped into issuing his policy due to the content of his application.

So, one of the interrogatories that Blocker sent to Tower Insurance read as follows:

Provide the name, address and phone number of the employee, officer or agent of Tower who has the most information about the commercial real property insurance underwriting guidelines that were in effect for Tower during the period from January 1, 2007, through December 31, 2009, for the area known generally as Immokalee, Collier County, Florida.

And another of Blocker’s interrogatories read as follows:

Provide in detail the power and authority, if any, that Morstan General Agency of Florida, Inc. had to do the following: a. Accept applications for commercial real property insurance policies. b. Conduct due diligence for, and otherwise investigate, commercial real property insurance applications. c. Underwrite commercial real property insurance applications. d. Bind coverage for, or issue, commercial real property insurance applications.

Tower Insurance objected to both of these interrogatories with stock insurance company objections: overbroad, irrelevant, and unlikely to lead to the discovery of admissible evidence. The carrier attempted to explain its objections, contending that this liability case did not warrant what it perceived to be property-related discovery.

Wrong, Tower Insurance … in recognizing the importance of underwriting discovery to a policyholder,3 the Middle District of Florida trial court held that such information is relevant, for example, to whether the insurance company performed its own underwriting and to what extent it relied on any alleged misrepresentation. Recall, folks, in deciding whether an insurer’s “application misrepresentation” policy rescission was appropriate, the trier of fact should assess more than the application content (or lack thereof). The trier of fact should also assess whether the application content (or lack thereof) that the carrier is hanging its policy rescission hat on was, in fact, material to and relied on by the carrier in deciding to accept the risk.

To read previous posts in my series on dynamite discovery decisions, click here.

1 Issuing an insurance policy pursuant to an insurance application is typically the function of an insurance company’s underwriting department.
2 Tower Ins. Co. of N.Y. v. Blocker, No. 2:12-cv-410, 2013 WL 1149264 (M.D. Fla. Mar. 19, 2013).
3 Especially where (as in Blocker) the insurer tries to avoid its contractual obligations by way of application misrepresentation allegations.