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Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
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July 05, 2024
Insurer Not Required to Take on the Burden of the Insured's Fraud

Rescission Appropriate When Insured Lies on Application

Read the full article at https://lnkd.in/gU2gHyfv, see the full video at https://lnkd.in/gYpWwNrw and at https://lnkd.in/gTm--tTM and https://zalma.com/blog plus more than 4800 posts.

Post 4827

Progressive Michigan Insurance Company (Progressive) appealed the order denying its motion for summary disposition and ordering reformation of plaintiff's, Janice Sherman's, automobile insurance policy even when reformation was not requested by Sherman.

In Janice Sherman v. Progressive Michigan Insurance Company and JOHN DOE, No. 364393, Court of Appeals of Michigan (June 20, 2024) the Court of Appeals explained the importance of the equitable remedy of rescission.

BACKGROUND FACTS

On November 12, 2020, Sherman applied to Progressive for a no-fault insurance policy for two vehicles-a 2006 Cadillac DTS sedan and a 1993 Chrysler New Yorker sedan. In the application, she identified her address as 16845 Tremlett Drive, Clinton Township, MI 48035, and confirmed that the vehicles were garaged at this address. The application also failed to disclose the total number of resident relatives, 14 years of age or older, and "all regular drivers" of her vehicles then residing in her household.

Progressive's litigation underwriting specialist, Janeen Copic, submitted an affidavit stating that Progressive would have charged a 7.7% higher premium had Sherman accurately disclosed the number of drivers and resident-relatives at the reported address, and a 75.5% increased premium had Sherman disclosed her permanent Detroit residence.

THE ACCIDENT

On July 14, 2021, Sherman was a passenger in one of the vehicles when it was hit from behind by John Doe. She was injured in this accident and asked Progressive for personal protection insurance (PIP) benefits. Progressive refused while rescinding the policy ab initio because of misrepresentations in her application. Sherman lied about the location where the cars were garaged and other individuals resided with her who she did not list on her application. Progressive estimated that, had Sherman included this additional information, it would have increased her premium by 83.2%.

THE SUIT

Sherman then sued Doe and Progressive claiming it unlawfully refused to pay PIP benefits and had breached her insurance contract. Sherman claimed the remedy should be tailored to the equities of the situation and needed to produce a fair result for all parties. The trial ordered that the policy be reformed to reflect the "insurance premium that [Progressive] believes it would have been entitled to had the insured listed Detroit as the residence.".

SUMMARY DISPOSITION

Summary disposition is appropriate if there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law.

An insurer has a reasonable right to expect honesty in the application for insurance. Indeed, it is well settled that an insurer is entitled to rescind a policy ab initio on the basis of a material misrepresentation made in an application for no-fault insurance. A misrepresentation is material if the insurer would have rejected the risk or charged an increased premium and would not have issued the same contract had it been given the correct information.

Even if fraud is not established rescission is justified in cases of innocent misrepresentation if a party relies upon the misstatement, because otherwise the party responsible for the misstatement would be unjustly enriched if he were not held accountable for his misrepresentation.

There was no reason in law or policy for the burden of such a risk to be placed on the insurer in preference to the insured who made the intentional material misrepresentations. The trial court's balance of the equities should have revealed misconduct by Sherman, but none by Progressive.

The Court of Appeals concluded that the trial court erred by failing to recognize this distinction.  By ordering the policy reformed, the trial court placed the financial burden of paying PIP benefits on Progressive, notwithstanding the fact that Sherman obtained those very same benefits by way of fraud. The trial court erred when it ordered reformation, rather than rescission and its order was reversed.

ZALMA OPINION

Rescission is an ancient equitable remedy that exists because it would be unfair to allow one party to a contract to profit from fraud in the obtaining of a contract of insurance. Sherman lied in the application  requesting an offer of insurance about the location and available drivers which, had she told the truth, would have resulted in much higher premiums.  The trial court trying to be fair wrongfully refused rescission but used another equitable remedy: reformation to require the victim of Sherman's fraud, Progressive, with the medical expenses. Neither Ms. Sherman nor anyone should be allowed to profit from their fraud.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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00:09:03
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September 12, 2025
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Shotgun Murder of Wife in Africa Not an Accident

See the full video at https://lnkd.in/gqEx5_5n and at https://lnkd.in/gdKcrKGs, and at https://zalma.com/blog plus more than 5150 posts.

In United States Of America v. Lawrence Rudolph, National Association Of Criminal Defense Lawyers, Amicus Curiae, No. 23-1278, United States Court of Appeals, Tenth Circuit (September 8, 2025) affirmed his conviction.

The United States Court of Appeals, Tenth Circuit’s opined on the appeal of Lawrence Rudolph, convicted for the foreign murder of his wife Bianca Rudolph and related mail fraud charges.

BACKGROUND AND CASE OVERVIEW

Lawrence Rudolph was tried and convicted for the fatal shooting of his wife during a hunting trip in Zambia. He was sentenced to life imprisonment for foreign murder and concurrent sentences for mail fraud related to his fraudulent procurement of life insurance proceeds following Bianca’s death. The government alleged that Rudolph intentionally killed Bianca to collect approximately $4.8 million from her life ...

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September 12, 2025
Evidence Established that Rudolf Murdered His Wife in Africa

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See the full video at https://lnkd.in/gqEx5_5n and at https://lnkd.in/gdKcrKGs, and at https://zalma.com/blog plus more than 5150 posts.

In United States Of America v. Lawrence Rudolph, National Association Of Criminal Defense Lawyers, Amicus Curiae, No. 23-1278, United States Court of Appeals, Tenth Circuit (September 8, 2025) affirmed his conviction.

The United States Court of Appeals, Tenth Circuit’s opined on the appeal of Lawrence Rudolph, convicted for the foreign murder of his wife Bianca Rudolph and related mail fraud charges.

BACKGROUND AND CASE OVERVIEW

Lawrence Rudolph was tried and convicted for the fatal shooting of his wife during a hunting trip in Zambia. He was sentenced to life imprisonment for foreign murder and concurrent sentences for mail fraud related to his fraudulent procurement of life insurance proceeds following Bianca’s death. The government alleged that Rudolph intentionally killed Bianca to collect approximately $4.8 million from her life ...

00:09:38
September 12, 2025
Evidence Established that Rudolf Murdered His Wife in Africa

Shotgun Murder of Wife in Africa Not an Accident

See the full video at https://lnkd.in/gqEx5_5n and at https://lnkd.in/gdKcrKGs, and at https://zalma.com/blog plus more than 5150 posts.

In United States Of America v. Lawrence Rudolph, National Association Of Criminal Defense Lawyers, Amicus Curiae, No. 23-1278, United States Court of Appeals, Tenth Circuit (September 8, 2025) affirmed his conviction.

The United States Court of Appeals, Tenth Circuit’s opined on the appeal of Lawrence Rudolph, convicted for the foreign murder of his wife Bianca Rudolph and related mail fraud charges.

BACKGROUND AND CASE OVERVIEW

Lawrence Rudolph was tried and convicted for the fatal shooting of his wife during a hunting trip in Zambia. He was sentenced to life imprisonment for foreign murder and concurrent sentences for mail fraud related to his fraudulent procurement of life insurance proceeds following Bianca’s death. The government alleged that Rudolph intentionally killed Bianca to collect approximately $4.8 million from her life ...

00:09:38
September 09, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime.

How Elderly Doctors Fund their ...

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September 08, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime.

How Elderly Doctors Fund their ...

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September 03, 2025

Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit

© 2025 Barry Zalma, Esq., CFE

When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.

On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...

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