## Facts

- Jeannette and Mischa Violin obtained an insurance policy from Fireman’s Fund covering a Guadagnini violin for an agreed value of $10,000.
- The application asked whether any company had ever refused or canceled insurance; the Violins answered “No.”
- The answer was false because Fireman’s Fund had canceled a musical-instruments policy issued to the Violins about four years earlier.
- The application stated it would be the basis of the contract and that false or fraudulent answers would render the insurance null and void and forfeit all claims.
- About two months after issuance, the violin was lost; the Violins submitted a claim.
- Fireman’s Fund attempted to cancel the policy, tendered the premium return, and denied liability based on a fraudulent, material misrepresentation.
- The trial court found the misrepresentation was material and not innocently made, and entered judgment for Fireman’s Fund.
- The Violins argued Fireman’s Fund was chargeable with knowledge of its own prior cancellation and, by issuing the policy, waived any right to avoid coverage.

## Issues

1. Whether an insurer may avoid liability for a material, fraudulent application misrepresentation when the truth contradicting the answer was in the insurer’s own files.
2. Whether issuing the policy without consulting its own records constitutes waiver (or estoppel) barring rescission or denial of coverage, despite a forfeiture clause for false answers.

## Decision

- The Nevada Supreme Court reversed the judgment for Fireman’s Fund.
- The court held that circumstances supported application of waiver, precluding Fireman’s Fund from avoiding liability on the policy.
- The court concluded the insurer’s failure to use information already in its own records, while asking the insured to disclose that same information, was conduct inconsistent with later reliance on the misstatement.

## Legal Principles

- A material, fraudulent misrepresentation in an insurance application generally allows an insurer to avoid the policy absent waiver or estoppel.
- An insurer may be charged with knowledge of information contained in its own records relevant to application answers.
- An insurer can waive contractual provisions inserted for its benefit, including clauses declaring the policy void and claims forfeited for false or fraudulent answers.
- Issuing a policy without checking readily available, contradictory information in the insurer’s own files can constitute waiver of the right to rescind or deny coverage based on the misrepresentation.

## Conclusion

Because Fireman’s Fund had the prior-cancellation information in its own records and nevertheless issued the policy, it waived reliance on the insureds’ false application answer and could not rescind or deny coverage for the loss.


Violin v. Fireman's Fund Ins. Co., 81 Nev. 456, 406 P.2d 287 (Nev. 1965)