In October, we reported here that the Intermediate Court of Appeals affirmed the cancellation of a policy based on the insured's misrepresentation of the type of vehicle being insured. The Hawaii Supreme Court recently affirmed the ICA's decision. See Farmer v. Pacific Speciality Ins. Co., 2011 Haw. LEXIS 28 (Haw. Feb. 7, 2011).
Farmer purchased a used motorcycle from a third party. The motorcycle was later stolen. Farmer had a policy insuring a 2000 Harley-Davidson. After the motorcycle was stolen, it was determined that bike was not a Harley Davidson, but a kit bike that was obtained through a magazine. The insurer refunded the insurance premiums paid by Farmer and rescinded the policy.
Farmer sued the insurer, seeking $20,000 for the amount owed Farmer on his claim for the stolen Harley Davidson. The district court found that the motorcycle was not a Harley-Davidson. Further, although Farmer had not engaged in fraudulent misrepresentation, he had made a material misrepresentation that the motorcycle was a Harley-Davidson in the insurance application. Therefore, the district court entered judgment in favor of the insurer and against Farmer.
The Supreme Court affirmed. The district court relied on Haw. Rev. Stat. sec. 431:10-209, which provided, in part, "A misrepresentation shall not prevent a recovery on the policy unless made with actual intent to deceive or unless it materially affects either the acceptance of the risk or the hazard assumed by the the insurer."
Farmer's argument on appeal was that he did not misrepresent the manufacture of the motorcycle as being Harley-Davidson. He stated that he simply provided the certificate of title for the motorcycle which indicated that it was a Harley-Davidson. An employee of the insurer, however, testified that when completing the insurance application, Farmer told her that the motorcycle was a Harley-Davidson, in addiction to giving her the certificate of title. This testimony provided substantial evidence to support the district court's finding that Farmer had made a misrepresentation regarding the manufacturer of the motorcycle.
