A commercial property owner submits an insurance application that includes the question: "Are there any active or abandoned underground storage tanks located on the premises?" The applicant inadvertently leaves the answer space for this specific question completely blank. The insurer's underwriting department processes the application, accepts the initial premium, and issues the policy without requesting the missing information or returning the application for completion. Eight months later, an abandoned underground tank on the property leaks, resulting in a substantial third-party liability claim. The insurer attempts to rescind the policy, arguing that the applicant concealed a material risk exposure. Based on legal interpretations affecting insurance contracts, how is a court most likely to rule on this dispute?
- The insurer cannot rescind the policy because issuing the contract based on an obviously incomplete application constitutes a waiver of its right to require that information.Cevap
- BThe insurer is legally estopped from rescinding the policy because the business owner detrimentally relied on the issued contract as proof that the underground tanks were covered.
- CThe insurer can successfully rescind the policy because the applicant's failure to answer the question constitutes a breach of an affirmative warranty, invalidating the contract.
- DThe insurer cannot rescind the policy because the contract of adhesion doctrine dictates that all omissions in an application must automatically be interpreted in favor of the insured.