Munroe v. Great American Insurance

The sole issue in this certified case from the United States District Court for the District of Rhode Island is whether, under the circumstances of this case, an insurance company that has issued a binder for liability insurance coverage in reliance on intentional and material misrepresentations by the insurance applicant can rescind the insurance contract ab initio so as to avoid liability to innocent third parties. The plaintiffs, Lyle Munroe and Shirley Munroe, brought *184a diversity action in the District Court, pursuant to Rhode Island General Laws §§ 27-7-1 and 27-7-2,1 to recover damages…