Tom purchased a homeowners’ insurance policy from SafeGuard…
Tom purchased a homeowners’ insurance policy from SafeGuard Insurance Company. During the application process, Tom was asked if he had any history of property damage claims. He failed to disclose that his previous home had suffered significant water damage from a burst pipe two years earlier, resulting in a $50,000 claim. Tom intentionally omitted this information because he feared his premium would increase. Six months later, he experienced another water damage from a burst pipe, causing $75,000 in damage. SafeGuard Insurance denied the claim and canceled the policy based on material misrepresentation. This is an example of