Can an insured reform an insurance policy that lists the wrong address for the property intended to be insured? A federal district court in Massachusetts recently answered no, at least in regards to a flood insurance policy. See Tucard, LLC v. Fidelity Nat'l Prop. & Cas. Ins. Co., 2008 U.S. Dist. LEXIS 52850 (D. Mass. July 10, 2008).
Fidelity issued a Standard Flood Insurance Policy (SFIP) to Tucard. Tucard intended for the policy to cover property it owned at 19 School Street. The insurance application listed the property as 303 Broadway Road, however. Consequently, Fidelity issued a policy covering 303 Broadway Road. During the policy period, flood damage estimated at $310,976 occurred at 19 School Street. Tucard's claim for coverage was rejected.
Tucard sued and alleged there was a mutual mistake when the policy was issued for 303 Broadway Road. Tucard did not own this property, but had a month to month lease for administrative space at the location. Further, 303 Broadway Road was not located in a flood zone and did not require flood insurance. The 19 School Street address, on the other hand, had been insured for flood by Travelers for a number of years. When the property's flood zone changed to reflect a more hazardous area, however, Travelers would no longer issue a flood policy. Therefore, Tucard went to Fidelity.
The district court ruled the SFIP policy was governed by federal regulations. These regulations only permitted reformation of a SFIP policy in certain situations when the policy premium paid was less than what was necessary to receive the requested policy coverage. See 44 CFR Pt. 61, App. A (2)(VII)(G). Therefore, as a matter of law, there were no grounds to reform Tucard's SFIP contract in light of the very narrow basis for reformation under the government regulations.
