Loyd v. Farmers Mutual Fire Insurance Company, 838 S.W.2d 542, 545 (Tenn.App. 1992). Any representation in an application for insurance, which naturally and reasonably influences the judgment of the insurer in making the contract, is a misrepresentation that increases the risk of loss. Lane v. Travelers Indemnity Company, 499 W.W.2d 643 (Tenn.App. 1973); Milligan v. M.F.A. Mutual Insurance Company, 497 S.W.2d 736 (Tenn.App. 1973). It is not necessary to find that the policy would not have been issued had the facts been disclosed on the application.
If a misrepresentation is found to increase the risk of loss, the policy is voidable under the statute even if the misrepresentation was innocently made. Lane v. Travelers Indemnity Co., 499 S.W.2d 643 (Tenn. [Ct.] App. 1973); see also Bagwell v. Canal Ins. Co., 663 F.2d 710, 711 (6th Cir. 1981) (per curiam). The issues of whether a misrepresentation exists and whether false answers were given with "intent to deceive[]" are questions of fact to be determined by the factfinder.
First, he must prove that the answers to the questions on the application were false. Then he must demonstrate that the misrepresentation was material, which requires proving either that the false answers were given with intent to deceive the insurer or that the false answers increased the risk of loss. Womack v. Blue Cross Blue Shield, 593 S.W.2d 294 (Tenn. 1980). If a misrepresentation is found to increase the risk of loss, the policy is voidable under the statute even if the misrepresentation was innocently made. Lane v. Travelers Indemnity Co., 499 S.W.2d 643 (Tenn.App. 1973); see also Bagwell v. Canal Ins. Co., 663 F.2d 710, 711 (6th Cir. 1981) (per curiam). The issues of whether a misrepresentation exists and whether false answers were given with "intent to deceive," are questions of fact to be determined by the factfinder.
1980). Such misrepresentation need not have been made fraudulently or with an intent to deceive; even an innocent misrepresentation may be the basis for invalidating an insurance policy if it increases the insurer's risk. Lane v. Travelers Indemnity Co., 499 S.W.2d 643 (Tenn.App. 1973). Thus, two specific issues are presented: (1) Whether plaintiff misrepresented any facts on his insurance application; and (2) if so, whether such misrepresentation increased the defendant's risk of loss on the policy.
"If a misrepresentation is found to increase the risk of loss, then the policy is voidable under the statute even if the misrepresentation was innocently made." Howell v. Colonial Penn Insur. Co., 842 F.2d 821, 822-23 (6th Cir. 1987) (citing Lane v. Travelers Indemnity Co., 499 S.W.2d 643 (Tenn.App. 1973)). The threshold question of whether an insured's answer to a question on an application is true or false is normally a question of fact, unless the minds of reasonable men could reach only one conclusion as to whether the answer is true or false. Womack, 593 S.W.2d at 295.
The Court believes there are genuine issues of material fact regarding: (1) whether Agent White addressed the insurance application questions to Mrs. Webb, Mrs. Madelon, or both; and (2) whether Agent White explained the ramifications of his advice that Mrs. Madelon be made a co-owner and an insured. Although plaintiffs need not have acted with the intent to deceive in order for INA to avoid the policy, Lane v. Travelers Indemnity Co., 499 S.W.2d 643, 647 (Tenn.App. 1973), it is necessary to determine that there was a misrepresentation. This can be done only by determining "what the insurer asked, required, or expected the applicant to represent."
o. v. Morley, 722 F.Supp. 1048 (S.D.N.Y. 1989) (insurer is entitled to rely on statements of insured); Lewis v. Paul Revere Life Ins. Co., 80 F.Supp.2d 978, 999 (E.D.Wis. 2000) (insurer has no duty to investigate insured's statements on application); In re Tri-State Armored Services, Inc., 332 B.R. 690, 721 (Bankr.D.N.J. 2005) ("`the applicant's duty to candidly fill out an insurance application is not in any way abated', whether or not an insurer performs an investigation." (citation omitted)); Amerson v. Gardner, 681 So.2d 570, 572-573 (Ala.Civ.App. 1996) (insurer has no duty to investigate insured's statements on application); Hornback v. Bankers Life Ins. Co., 176 S.W.3d 699, 705 (Ky.Ct.App. 2005) (same); Smith ex rel. Stephan v. AF L Ins. Co., 147 S.W.3d 767, 777 (Mo.Ct.App. 2004) (same); Crawford v. Manhattan Life Ins. Co. of New York, 208 Pa.Super. 150, 221 A.2d 877, 886 (1966) (same); Summit Ins. Co. v. Porcaro, CIV.A. 99-2521, 2004 WL 1067920 (R.I.Super. May 5, 2004) (same); Lane v. Travelers Indem. Co., 499 S.W.2d 643, 649 (Tenn.Ct.App. 1973) (Before an insurer must investigate, "there must be a reason or cause for the further investigation and the insurer must be put upon inquiry by some fact or information in possession of the insurer."); Fireman's Fund Ins. Co. v. Knutsen, 132 Vt. 383, 324 A.2d 223, 231 (1974) (insurer has no duty to investigate insured's statements on application); Harper v. Fid. Guar. Life Ins. Co., 234 P.3d 1211, 1218-19 (Wyo. 2010) (same).
Under this statute, an insurer may void a contract for insurance only where a misrepresentation is made: (1) with actual intent to deceive, or (2) where the misrepresentation increases the insurer's risk of loss. Under this "increase of risk of loss" situation, no actual intent to deceive is required, and determination of such an increase is a matter of law for the court to decide. See, e.g.,Lane v. Travelers Indem. Co., 499 S.W.2d 643, 647 (Tenn.Ct.App. 1973). This Court has noted that, in order to avoid coverage based upon T.C.A. ยง 56-7-103, "the insurer must first prove a misrepresentation."
See Howell v. Colonial Penn Ins. Co., 842 F.2d 821 (6th Cir. 1987); Renner v. Firemen's Ins. Co., 136 F. Supp. 114 (E.D.Tenn. 1955); Lane v. Travelers Indem. Co., 499 S.W.2d 643 (Tenn.Ct.App. 1973). Accordingly, then, in order to void an application for insurance, the representation made by the insured must be false in the sense that it was made with the intent to deceive and that it concealed matters which increased the risk of loss to the insurance company.
Any misrepresentation which naturally and reasonably influences the judgment of the insurer in making the contract is within the meaning of the statutory words, "increases the risk of loss". Lane v. The Travelers Indemnity Company, Tenn. App. 1973, 499 S.W.2d 643, Milligan v. M.F.A. Mutual Insurance Company, Tenn. App. 1973, 497 S.W.2d 736, and authorities cited therein. It is not necessary to find that the policy would not have been issued if the truth had been disclosed. It is sufficient that the insurer was denied information which it sought in good faith and which was deemed necessary to an honest appraisal of insurability. Johnson v. State Farm Life Insurance Company, Tenn. App. 1981, 633 S.W.2d 484.