United States Court of Appeals

For the Eighth Circuit

___________________________

No. 14-3098

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The Northwestern Mutual Life Insurance Company

lllllllllllllllllllll Plaintiff - Appellee

v.

Douglas G. Weiher

lllllllllllllllllllll Defendant - Appellant

____________

Appeal from United States District Court 

for the District of Minnesota - Minneapolis

____________

 Submitted: June 10, 2015

 Filed: December 1, 2015

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Before LOKEN, BYE, and KELLY, Circuit Judges.

____________

KELLY, Circuit Judge.

Douglas Weiher appeals the district court’s grant of summary judgment

allowing Northwestern Mutual Life Insurance Company (Northwestern) to rescind

a disability insurance policy. Because we conclude Northwestern was not entitled

to summary judgment, we reverse and remand.1

1

We have jurisdiction under 28 U.S.C. § 1291.
I. Background

Weiher lived in Minnesota and practiced dentistry in Wisconsin. In 2009, he

owned two disability insurance policies: a Unum group disability policy, and a

Great-West Life and Annuity Company (Great-West) policy. On May 4, 2010,

Weiher applied to Northwestern for additional disability insurance coverage. In his

application, Weiher specifically agreed that the Northwestern policy would replace

his Great-West policy and that he would terminate the Great-West policy within 90

days of the date of the application. The application warned that any policy issued

could be rescinded if the Great-West policy was not cancelled. 

Northwestern offered Weiher a disability insurance policy with a monthly

benefit of $8,400. On July 20, 2010, before receiving the policy, Weiher signed an

Amendment to Application, which supplemented and amended the May 4, 2010,

application, and agreed to terminate the Great-West policy by its next premium due

date. The Amendment to Application also warned of Northwestern’s rights to

rescind the policy if the Great-West policy was not canceled. Weiher did not cancel

the Great-West policy. 

In 2012, Weiher began to suffer from neurological and autoimmune

symptoms and could no longer practice dentistry safely. He submitted claims for

disability benefits to Great-West and Unum. Great-West and Unum investigated his

claim, ultimately determined he was totally disabled from his profession, and paid

his claims.

Weiher also made a claim to Northwestern, who quickly discovered he had

not terminated his Great-West policy. Northwestern then reviewed whether it would

have issued the policy to Weiher if it had known he would not cancel the Great-West

policy. Northwestern determined it would not have issued the policy because, in its

view, doing so increased the risk that Weiher would be over-insured and would

-2-
therefore have more incentive to make a claim under the policy. Northwestern

notified Weiher that it was rescinding the policy. 

Northwestern filed an action in the United States District Court for the District

of Minnesota claiming Weiher’s promise to cancel the Great-West policy was a

misrepresentation that entitled it to rescind the policy. Weiher counter-claimed for

breach of contract. Both parties moved for summary judgment. Construing

Weiher’s promise to cancel the Great-West policy as a warranty, the district court

applied Wisconsin law.2

 The district court found that Northwestern was entitled to

rescind the policy under Wisconsin Statutes § 631.11(3)3

 because Weiher’s failure

to terminate the Great-West policy increased the risk to Northwestern. The district

court entered judgment in favor of Northwestern. Weiher appeals. 

II. Discussion

Our review of a district court’s decision on cross-motions for summary

judgment is de novo. Netherlands Ins. Co. v. Main St. Ingredients, LLC, 745 F.3d

909, 912 (8th Cir. 2014). Summary judgment is appropriate “if the movant shows

2

Although Northwestern initially disputed that Wisconsin law applied, it has

abandoned that position on appeal. See Freitas v. Wells Fargo Home Mortg., Inc., 703

F.3d 436, 438 n.3 (8th Cir. 2013). 

3

Section 631.11(3) provides: 

Effect of Failure of Condition or Breach of Promissory Warranty. 

No failure of a condition prior to a loss and no breach of a promissory

warranty constitutes grounds for rescission of, or affects an insurer’s

obligations under, an insurance policy unless it exists at the time of the

loss and either increases the risk at the time of the loss or contributes to

the loss. This subsection does not apply to failure to tender payment of

premium. 

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that there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Id. (quoting Fed. R. Civ. P. 56(a)). 

The parties agree on appeal that Wisconsin law applies. Accordingly, we

apply substantive Wisconsin law in this diversity action. Netherlands Ins., 745 F.3d

at 912–13. “We review the district court’s application of [Wisconsin law] de novo

without deference.” Gersham v. Am. Cas. Co. of Reading, PA, 251 F.3d 1159, 1161

(8th Cir. 2001) (internal quotation marks omitted). 

Under Wisconsin law, the interpretation of an insurance contract and the

interpretation of a statute are both questions of law reviewed de novo. Fox v.

Catholic Knights Ins. Soc., 665 N.W.2d 181, 186–87 (Wis. 2003). “We must predict

how the Supreme Court of [Wisconsin] would rule, and we follow decisions of the

intermediate state court when they are the best evidence of [Wisconsin] law.” 

Netherlands Ins. Co., 745 F.3d at 913 (internal quotation marks omitted).

Under Wisconsin law, insurance contracts are “governed by the same rules

that govern contract interpretation in general.” Wis. Label Corp. v. Northbrook

Prop. & Cas. Ins. Co., 607 N.W.2d 276, 282 (Wis. 2000). As with other contracts,

Wisconsin courts seek to “determine and give effect to the intent of the contracting

parties.” Am. Family Mut. Ins. Co. v. Am. Girl, Inc., 673 N.W.2d 65, 73 (Wis.

2004). Where the language of the insurance contract is unambiguous, Wisconsin

courts apply the contract’s literal meaning. Wis. Label Corp., 607 N.W.2d at 282. 

Although insurance policies are construed as they would be understood by a

reasonable insured, Wisconsin courts “do not interpret insurance policies to provide

coverage for risks that the insurer did not contemplate or underwrite and for which

it has not received a premium.” Am. Girl, 673 N.W.2d at 73. 

-4-
Wisconsin state law limits the circumstances under which an insurer may

rescind an insurance policy. See Wis. Stat. § 631.11.4

 The district court in this case

applied § 631.11(3), which pertains to failures of condition and breaches of

promissory warranties after an effective policy is in place. Neither party argues on

appeal that the district court erred in construing Weiher’s promise to cancel the

Great-West policy as a promissory warranty governed by § 631.11(3). Further,

neither party disputes that Weiher’s failure to cancel the Great-West policy occurred

after an effective policy was in place.

A promissory warranty is “[a] warranty that facts will continue to be as stated

throughout the policy period, such that a failure of the warranty provides the insurer

with a defense to a claim under the policy.—Also termed continuing warranty.” 

Fox, 665 N.W.2d at 190 (emphasis omitted) (quoting Black’s Law Dictionary). 

“Promissory warranties are those that require that something shall or shall not be

done after the policy takes effect.” Id. at 189 (emphasis omitted) (quoting comment

to Wisconsin Civil Jury Instruction 3105); accord 6 Couch on Ins. § 81:14 (“A

promissory warranty is one by which the insured stipulates that something shall be

done or omitted after the policy takes effect and during its continuance and has the

effect of a condition subsequent.”). Under the facts and procedural posture of this

case, we cannot say the district court erred in construing Weiher’s promise to cancel

the Northwestern policy as a promissory warranty that was subject to the restrictions

of § 631.11(3). 

Weiher concedes that he failed to cancel his Great-West policy and this failure

existed at the time of loss. He contends, however, the district court erred in not

requiring Northwestern to meet its burden to show that his failure to cancel the

Great-West policy “increased [Northwestern’s] risk at the time of the loss.” See

4

A rescission based on a misrepresentation or breach of affirmative warranty is

governed by § 631.11(1)(b), and a rescission based on a failure of condition or breach

of promissory warranty is governed by § 631.11(3).

-5-
Wis. Stat. § 631.11(3). “The burden of proof on an insurance company seeking to

rescind an insurance contract is . . . clear and convincing evidence as to each element

of the statute.” Pum v. Wis. Physicians Serv. Ins. Corp., 727 N.W.2d 346, 353 (Wis.

Ct. App. 2006).

As an initial matter, the parties dispute what risk Northwestern insured against

in its policy. Weiher asserts that the risk was that he “might become disabled and

be unable to work in his occupation.” He argues Northwestern has not shown that

the failure to cancel the Great-West policy increased the risk that he would become

disabled and unable to work. Northwestern concedes it has not shown that the

existence of additional insurance actually increased the risk that Weiher would suffer

a medical condition that would give rise to a disability. Instead, Northwestern

contends the risk it insured against was that Weiher would seek and obtain disability

benefits. Part of that, Northwestern agrees, was the risk that Weiher would suffer

a medical condition that rendered him physically or mentally disabled. Another part,

however, was the risk that he would make and perpetuate a disability claim. 

Northwestern argues that an over-insured individual is more likely to make and

perpetuate a claim, thereby increasing its risk. 

It is not necessary to resolve the parties’ dispute concerning whether risk, as

that term is used in § 631.11(3), includes over-insurance.5

 Even assuming

Northwestern’s risk included the risk of over-insurance, Northwestern failed to show

it was undisputed that Weiher was over-insured at the time of the loss. See Wis.

Stat, § 631.11(3). As support for its argument, Northwestern first relies on its

Financial Underwriting Standards (Underwriting Standards). For example,

Northwestern points to Section 626.1.1 of its Underwriting Standards, which

provides:

5

The statute does not define risk. 

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Financial underwriting is the evaluation of the financial aspects of an

application to avoid over-insurance. The company is concerned about

over-insurance because experience has shown that it leads to an

increase in the number of claims and an increase in the length of

claims. Specifically, when applying financial underwriting standards,

an underwriter will evaluate four key variables: earned income,

unearned income, net worth, and bankruptcy.

Northwestern further relies on its underwriting standard on Issue and Participation,

which provides: 

Northwestern Mutual Disability Insurance coverage is designed to

replace a portion of the financial loss that occurs if an Insured becomes

disabled and cannot work. An important aspect of disability

underwriting is determining the appropriate portion of the financial loss

to insure. It is desirable that the Insured have enough coverage to

continue to provide necessities in the event of disability. It is

undesirable to allow so much coverage that the Insured is better off,

financially, after disability than before disability. Such a situation

makes it tempting to even highly motivated people to continue

receiving benefits rather than return to work. This is costly to the rest

of our policy owners, and also impedes the recovery of the insured. In

short, over insurance is not a healthy situation for any of our policy

owners. To minimize the risk of over insurance, Northwestern Mutual

limits the amount of coverage in which we will participate on any one

life. Total coverage on any one life (including all outside coverage)

will not normally be allowed to exceed Northwestern Mutual’s

published limits.

This evidence may support Northwestern’s contention that it would not have

issued the policy to Weiher had it known Weiher would not cancel the Great-West

policy. But the question is not whether Northwestern would (or would not) have

issued the policy had it known what it knows now. The question is whether, after

the policy went into effect, the failure to cancel the policy increased the risk at the

time of the loss, i.e., when Weiher became disabled and made a claim for benefits

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in 2012.6

 Furthermore, § 631.11(3) speaks to a particular policy, and an insurer’s

ability to rescind that particular policy, not to general risks taken into consideration

by underwriters as a whole in deciding whether to issue certain types of policies as

described in these Underwriting Standards. See Wis. Stat. § 631.11(3) (“no breach

of a promissory warranty constitutes grounds for rescission of . . . an insurance

policy unless it exists at the time of the loss and either increases the risk at the time

of the loss or contributes to the loss.” (emphasis added)). General underwriting

principles provide a helpful backdrop to explain the nature of a particular risk, but

they do not conclusively answer the specific question at issue here. 

Next, Northwestern presented the testimony of its Standards Compliance

Consultant, Don Seebach. Seebach’s statements likewise do not address whether

Weiher was over-insured in 2012, thus resulting in an increased risk to

Northwestern. In an affidavit, Seebach averred that Northwestern

specifically relied on Dr. Weiher’s representation that he would

terminate his [Great-West] disability policy. His failure to do so

increased the risk to Northwestern Mutual. Northwestern Mutual

would not have issued a Disability Income Policy . . . had it known that

Dr. Weiher would not terminate his [Great-West] Disability Policy.

Again, this testimony may be sufficient to show that Weiher’s agreement to cancel

the Great-West policy was material to Northwestern’s decision to issue the policy. 

But rescission pursuant to § 631.11(3) does not turn on a finding of materiality. Cf.

Wis. Stat. § 631.11(1)(b). And Seebach’s simple and unsupported statement that

Weiher’s failure to cancel “increased the risk” is insufficient to meet Northwestern’s

burden on rescission as to this particular policy. See Pum, 727 N.W.2d at 353. 

6

We respectfully disagree with the dissent’s characterization of how we

construe the phrase “increases the risk at the time of the loss.” In fact, we see little,

if any, difference between the dissent’s view and our view of “the question” at issue. 

(Dissenting Opinion, infra, slip op. at 17.) 

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Northwestern also relies on Seebach’s deposition testimony that Weiher’s

failure to cancel the Great-West policy increased the risk “from an underwriting

standpoint,” because “he had more coverage in force than we would allow.” That

increased the risk, according to Seebach, because the amount the person receives in

disability benefits “would be possibly higher than what they could earn while in

their occupation.” However, when specifically asked whether he knew if that was

the case with Weiher, Seebach conceded he did not know and was “just talking

generalities.” Seebach also admitted that he was not aware of any other way that

Weiher’s failure to cancel the Great-West policy might have increased

Northwestern’s risk. 

Northwestern’s evidence is insufficient to show that it is entitled to summary

judgment because the evidence does not address the specific insurance policy at

issue in this case. Even if a general aversion to “over-insurance,” as described in the

Underwriting Standards and testified to by Seebach, is sufficient to prove that

Weiher’s breach of his promise to cancel the Great-West policy “increase[d] the

risk” to Northwestern, it does not address whether his breach “increase[d] the risk

at the time of the loss.” Weiher, on the other hand, offered evidence showing that,

based on his income in 2012, he was not over-insured at the time of the loss. And

even Northwestern’s Disability Benefits Team Lead Consultant, Tricia Hoesly,

testified that the policy did not prevent Weiher from cancelling the Great-West

policy but then signing up for another disability policy from a different insurance

company—which also would have provided him with additional disability coverage. 

Accordingly, based on the record before us, we conclude Northwestern was not

entitled to summary judgment under § 631.11(3). 

Northwestern alternatively asserts it is allowed to rescind the insurance

contract pursuant to § 631.11(1)(b) because the failure to cancel the Great-West

policy also can be construed as a “misrepresentation or breach of affirmative

warranty” which under some circumstances can be proper grounds for rescission of

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an insurance contract. See Wis. Stat. § 631.11(1)(b). Even if so construed, there

appears to remain a factual dispute concerning whether Weiher “knew or should

have known that the representation was false” or “was made with intent to deceive” 

Id. Weiher claims he mistakenly failed to cancel the policy; Northwestern alleges

otherwise. Such factual disputes are usually questions for the jury. Pum, 727

N.W.2d at 352. In any event, the district court did not address this alternative

ground, and we decline to do so for the first time on appeal. See Loftness

Specialized Farm Equip., Inc. v. Twiestmeyer, 742 F.3d 845, 851 (8th Cir. 2014)

(“When it would be beneficial for the district court to consider an alternative

argument in the first instance, we may remand the matter to the district court.”). 

The district court may consider on remand Northwestern’s alternative ground for

summary judgment. 7

 

III. Conclusion

Accordingly, we reverse the decision of the district court to grant

Northwestern summary judgment and remand for further proceedings.

LOKEN, Circuit Judge, dissenting.

I respectfully dissent. Based upon the Wisconsin Supreme Court’s controlling

decision in Fox v. Catholic Knights Ins. Soc’y, 665 N.W.2d 181 (Wis. 2003), I

conclude the majority has misinterpreted Wis. Stat. § 631.11(3), a statute that does

not even apply to the issue whether Northwestern Mutual Life Insurance Company

is entitled to rescind the disability insurance policy it issued to Douglas Weiher.

7

We likewise decline to consider Weiher’s argument that he is entitled to

summary judgment on his breach of contract counterclaim. Because the district court

concluded Northwestern had properly rescinded the policy, it denied Weiher’s motion

for summary judgment. We believe “it would be beneficial for the district court to

consider this issue in the first instance.” Id.
I. 

In mid-2009, with his income from the practice of dentistry increasing,

Weiher advised his independent insurance agent that he would like to increase the

monthly disability benefits that would be provided by his two existing policies. One

policy, with UNUM, would pay $5,000 per month if Weiher became totally

disabled. The other, a Great-West Life policy sponsored by the American Dental

Association, would pay $6,000 per month. The agent began negotiating with

Northwestern, and Weiher eventually submitted to Northwestern tax returns and

other information disclosing current annual earned income of $271,500 and the two

existing disability policies. Northwestern advised that it was willing to issue a new

policy offering disability benefits of $8,400 per month provided Weiher terminated

the Great-West policy. Though Weiher preferred to retain the Great-West policy

because he wanted total monthly benefits of $15,000, he signed an Amendment To

Application stating:

I agree to terminate the insurance listed below by the next premium due 

date. I understand Northwestern Mutual Life is relying on this

agreement and would not have issued a policy without this agreement. 

If the coverage listed below is not terminated by the next premium due

date, or is terminated and later reinstated, any policy issued as a result

of this application may be rescinded and the premiums returned.

The Amendment listed a Great-West policy in the amount of $3,500 with a next

premium due date of July 11, 2010. The Amendment was false when signed because

the Great-West policy benefit was in fact $6,000 and the July 11 premium had

already been paid. Weiher continued paying premiums on the Great-West policy

and submitted a claim for disability benefits in 2012, which Great-West paid. Thus,

while Weiher may not have defrauded Northwestern, he knowingly breached a

contractual obligation that was a condition precedent to Northwestern issuing its

policy.

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II.

It is undisputed that Northwestern’s unwillingness to issue Weiher a policy

providing a monthly disability benefit of $8,400 unless he terminated the Great-West

policy was based upon financial underwriting standards that included coverage

limits based on a percentage of earned income designed to avoid the risk of

overinsurance. “Overinsurance” is an imprecise term with different meanings. In

this context, as the Wisconsin Court of Appeals has noted:

“overinsurance” refers to a situation where multiple coverages exist to

a degree where the insured is tempted to trigger the insured event and

thereby obtain the substantial coverage proceeds. An “overinsurance”

clause prohibiting such excess coverage serves public policy by

reducing the temptation of such fraud. See Struebing v. American Ins.

Co., 197 Wis. 487, 493-94, 222 N.W. 831, 834 (1929).

Becker v. State Farm Mut. Auto. Ins. Co., 512 N.W.2d 191, 193 (Wis. App. 1993). 

This type of overinsurance is a well-recognized risk to disability insurers:

People who know that their full income will continue after they stop

working may take more risks in their daily lives and will not try as hard

to return to work after injury or illness; some insureds will fake the

existence of a disability or exaggerate its severity. The closer the

disability benefit to 100% of earned income, the greater the moral

hazard.

Hall v. Life Ins. Co. of N. Am., 317 F.3d 773, 775 (7th Cir. 2003). 

In Langlois v. Wis. Nat’l Life Ins. Co., 119 N.W.2d 400, 403 (Wis. 1963), the

Wisconsin Supreme Court held that, if the insured misrepresented in a disability

insurance policy application that his annual income was $8,500, when in fact it was

less than $3,000, the misrepresentation “materially affected the [insurer’s]

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acceptance of this risk,” which would defeat recovery under the policy even absent

an intent to deceive the insurer. At that time, the applicable statute, § 209.06(1),

provided that no representation or warranty “shall be deemed material or defeat or

avoid the policy . . . unless the matter misrepresented or made a warranty increased

the risk or contributed to the loss.” 

In 1975, as “part of a broad revision to the insurance laws,” the Wisconsin

Legislature enacted Wis. Stat. § 631.11 “to replace section 209.06 of the previous

statutes and broaden it to expressly bring failures of condition within the statute.” 

Fox, 665 N.W.2d at 191. Two provisions of the current § 631.11 are relevant here:

(1)(b) Misrepresentation or breach of affirmative warranty. No

misrepresentation, and no breach of an affirmative warranty, that is

made . . . in the negotiation for or procurement of an insurance contract

constitutes grounds for rescission of, or affects the insurer’s obligations

under, the policy unless, if a misrepresentation, the person knew or

should have known that the representation was false, and unless any of

the following applies:

1. The insurer relies on the misrepresentation or affirmative

warranty and the misrepresentation or affirmative warranty is either

material or made with intent to deceive.

2. The fact misrepresented or falsely warranted contributes to the

loss.

(3) Effect of failure of condition or breach of promissory

warranty. No failure of a condition prior to a loss and no breach of a

promissory warranty constitutes grounds for rescission of, or affects an

insurer’s obligation under, an insurance policy unless it exists at the

time of the loss and either increases the risk at the time of the loss or

contributes to the loss.

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III.

In Fox, the insured applied for a life insurance policy and paid the initial

premium. The application stated that coverage would not begin until a blood test

was completed. The insured was killed in an auto accident before completing the

blood test. The Wisconsin Court of Appeals held that § 631.11(3) trumped this

condition precedent, and therefore the policy provided coverage because the insurer

“could not prove that the failure to complete the blood draw and medical studies

contributed to or increased the risk of loss.” 665 N.W.2d at 186. 

The Wisconsin Supreme Court unanimously reversed. First, examining the

text of § 631.11(3), the Court concluded that it applies only to conditions subsequent

and to promissory or continuing warranties, not to conditions precedent that “relate

to the attachment of risk and precede the existence of the policy . . . . Insurers

cannot show, under § 631.11(3), that the failure of such a condition [precedent]

increased the risk at the time of the loss or contributed to the loss because risk has

not yet attached.” Id. at 188. Next, the Court thoroughly examined the legislative

history of § 631.11, finding that its purpose was both to protect policyholders from

“harsh common law doctrines” and to protect “the ability of insurance companies

to get the information they need to underwrite policies.” Id. at 192. One purpose

of the statute was to protect insurers against “violations of conditions that would

preclude acceptance of the risk.” Id., quoting Act of June 21, 1975, ch. 375, § 41,

1975 Wis. Sess. Laws 1150, 1169. “Were we to rule that interim insurance is

automatically provided upon payment of a first premium,” this purpose would be

frustrated, the Court explained, because “potential insureds would have no incentive

to fulfill requirements such as medical examinations which assist insurers with

underwriting.” Id.

After concluding that § 631.11(3) did not apply, the Court turned to whether

the required blood test was a condition precedent to coverage:

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Whether a condition is a condition precedent to coverage depends on

the language of the contract itself. If the proposed insured does not

then get an examination required for coverage, there is no contract for

insurance.

Id. at 192. Based on the contract in Fox, the Court concluded that “the conditional

insurance agreement makes absolutely clear that coverage is not effective until the

required medical examination has taken place.” Id. at 193. “As a result, we must

conclude that there was no insurance policy in effect at the time Patrick Fox died and

that, therefore, Wis. Stat. § 631.11(3) does not apply.” Id. at 194. 

In my view, the decision in Fox applies equally to this case. The negotiations

between Weiher and Northwestern, and in particular the above-quoted Amendment

To Application, make clear, in the words of Fox, “that coverage is not effective until

the required [termination of the Great-West policy] has taken place.” Like the

insured’s promise to get a blood test in Fox, Weiher’s promise to terminate the

Great-West policy was a condition precedent, but it did not preclude the parties from

putting the policy in place on a conditional basis. If viewed as a warranty, the

promise was “that facts are as stated at the beginning of the policy period,” not a

promise “that facts will continue to be as stated throughout the policy period.” Id.

at 190 (emphasis in original, quoting Black’s Law Dictionary). Note that the Court

in Fox, having concluded that § 631.11(3) did not apply, did not turn to

§ 631.11(1)(b) to determine whether there was a misrepresentation or breach of

affirmative warranty that affected the insurer’s obligation. Rather, the Court held

that there was no coverage because the conditional policy never came into existence. 

In effect, the Court ruled that § 631.11 simply does not apply to a condition

precedent to the existence of a policy. At minimum, Fox established that breach of

a condition precedent that defines insurability meets the reliance and materiality

requirements of § 631.11(1)(b).

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IV.

For these reasons, the decision in Fox conclusively establishes that the district

court properly granted summary judgment to Northwestern because Wis. Stat. §

631.11(3), the statute on which Weiher relied in opposing summary judgment, does

not apply on the undisputed facts of this case. 

In addition, if § 631.11(3) did apply in this case, I agree with the district court

that the interpretation of that statute urged by Weiher, and now adopted by the

majority, is “unpersuasive” because it depends upon a definition of “risk” that is

“unreasonably narrow and unsupported.” As the analysis in Fox makes clear, the

“risk” referred to in § 631.11(3) includes both the risk of loss being insured and the

financial risk to the insurer of providing coverage for the insured risk. The latter risk

includes, as a matter of Wisconsin public policy, the “moral hazard” of

overinsurance that creates a risk that the insured will be tempted to trigger the

insured event and thereby obtain the substantial coverage proceeds. See Manzella

v. Paul Revere Life Ins. Co., 872 F.2d 96, 99 (5th Cir. 1989) (disability insured’s

failure to disclose another policy “did not increase the risk that he would become

disabled” but did “affect the acceptance of the risk” because “an overinsured person

has a strong inducement not to return to work”). Weiher’s promise to cancel the

Great-West policy “materially affected [Northwestern’s] acceptance of this risk.” 

Langlois, 119 N.W.2d at 403. His breach of that material promise increased the risk

by enlarging his monthly disability benefit beyond what Northwestern’s financial

underwriting standards allowed. That increased risk existed from the moment he

submitted the false Amendment stating he would terminate the Great-West policy

at the due date of a premium that had already been paid, until he filed claims for

disability benefits with both Northwestern and Great-West in 2012.

The majority construes the phrase “increases the risk at the time of the loss”

in § 631.11(3) as requiring proof that Northwestern would not have issued the policy

-16-
based on Weiher’s greater income when he filed the claim for disability benefits in

2012. The district court properly concluded, consistent with the analysis of

conditions precedent in Fox, “This change in [Weiher’s] income is irrelevant. [He]

created a binding contract in 2010, and even if his income increased, his disability

benefits were nevertheless closer to his earned income than they otherwise should

have been under the Policy.” Thus, even if § 631.11(3) applies, the question is not

whether Northwestern would have issued the same policy to Weiher in 2012 with

the Great-West policy still in effect but whether Weiher’s failure to cancel the GreatWest policy increased Northwestern’s risk in 2012. 

In 2012, Weiher had many proper ways to seek an increase of his disability

benefits based on his greater income -- he could terminate the Great-West policy and

apply to Northwestern for increased benefits under the policy here at issue or a

second policy; or he could keep the Great-West policy, terminate the Northwestern

policy, and apply to Great West, Northwestern, or another insurer for increased

disability benefits based upon his earned income in 2012. Instead, he chose to

continue breaching his contractual commitment to Northwestern, thereby failing to

satisfy a condition precedent to coverage that, under Fox, prevented that coverage

from coming into existence. Fortunately, the majority opinion does not preclude the

district court from correctly applying Wisconsin law as established in Fox on

remand. Rather than impose additional work on the district court, I would affirm its

correct grant of summary judgment rejecting Weiher’s claim for disability benefits.

______________________________

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