A RESTAURANT IN WASHINGTON STATE had a fire caused by their broiler. The insurance company denied their claim and the district court issued a summary judgment in favor of them. The appellants appealed.
The insurer had issued a policy covering the appellant’s family business. The policy included a “concealment, misrepresentation or fraud” condition that voided the policy in any case of fraud relating to coverage, the covered property, interest in the covered property or a claim. Following a fire at the family business, the insurer denied coverage based on this condition in the policy.
Under Washington law, a clause voiding an insurance policy due to fraudulent statements is enforceable. The insurer may void the policy if the false statements were knowingly made in the application and in making them, the applicant had an intent to deceive the company.
In their insurance application, the appellants represented, among other things, coverage under the “protective safeguards” endorsement to the policy. The safeguards condition required the insured to maintain an automatic sprinkler system and fire alarm in conformity with a defined schedule. The schedule, in turn, required a “fully functional actively engaged fire extinguishing system over the entire cooking area with an automatic shut off for the heat source with a semi-annual service contract.”
In their insurance application, the appellants represented that their fire extinguishing system covered all cooking surfaces and deep fryers; and their hoods, ducts and filters were cleaned at least every six months or more frequently. However, the appellants knew that these statements were false. Their hoods, ducts and filters were not cleaned at least every six months and their system did not protect all cooking areas and deep fryers.
Under the accompanying exclusion, coverage could be denied if the applicants: 1. knew of any suspension or impairment in any protective safeguard listed in the schedule and failed to notify the insurer of that fact; or 2. failed to maintain any protective safeguard listed in the schedule and over which the insured had control, in complete working order.
The appellants failed to raise a material issue of fact regarding coverage denial under this exclusion because the fire suppression system did not cover the broiler that was the source of the fire. In addition, the appellants had ample notice through inspection reports to make the necessary adjustments to the fire suppression system.
Therefore, the judgment of the trial court was confirmed.