NE Code § 44-358 (2021)
2021 Nebraska Revised Statutes|Chapter 44 - Insurance|44-358 - Policies; misrepresentations; warranties; conditions; effect.

44-358.  Policies; misrepresentations; warranties; conditions; effect.No oral or written misrepresentation or warranty made in the negotiation for a contract or policy of insurance by the insured, or in his behalf, shall be deemed material or defeat or avoid the policy, or prevent its attaching, unless such misrepresentation or warranty deceived the company to its injury. The breach of a warranty or condition in any contract or policy of insurance shall not avoid the policy nor avail the insurer to avoid liability, unless such breach shall exist at the time of the loss and contribute to the loss, anything in the policy or contract of insurance to the contrary notwithstanding.Source   Laws 1913, c. 154, § 51, p. 419;   R.S.1913, § 3187;   Laws 1919, c. 190, tit. V, art. IV, § 22, p. 598;   C.S.1922, § 7787;   C.S.1929, § 44-322;   R.S.1943, § 44-358. Annotations  1. Misrepresentation 2. Breach of condition 3. Miscellaneous 1. Misrepresentation In Nebraska there is a common-law right to rescind or avoid insurance policies for material misrepresentations, which is recognized in and limited by this provision. This section has been interpreted to recognize the right to avoid a policy of insurance under certain circumstances in the case of material misrepresentations by the insured. An accident resulting in injury or damage to a third person does not destroy the right of an insurer to rescind an automobile liability insurance policy for fraud in the application. Glockel v. State Farm Mut. Auto. Ins. Co., 224 Neb. 598, 400 N.W.2d 250 (1987). This section shall be read in pari materia with section 44-710.14. White v. Medico Life Ins. Co., 212 Neb. 901, 327 N.W.2d 606 (1982). The exclusion of flight by pilot without medical certificate was not invalidated by this section. Omaha Sky Divers Parachute Club, Inc. v. Ranger Ins. Co., 189 Neb. 610, 204 N.W.2d 162 (1973). Policy avoided where insured knowingly misrepresented condition of health with intent to deceive insurer to its injury. Vackiner v. Mutual of Omaha, 182 Neb. 611, 156 N.W.2d 163 (1968). This section does not deprive an insurance company of the defense of fraud. Sorter v. Citizens Fund Mutual Fire Ins. Co., 151 Neb. 686, 39 N.W.2d 276 (1949). Where a question in an application for insurance calls for an answer peculiarly within the knowledge of the applicant, an untrue answer relating to a matter material to the risk and relied upon by the insurer will avoid the policy. Gillan v. Equitable Life Assurance Society, 143 Neb. 647, 10 N.W.2d 693 (1943). To defeat recovery on the ground of fraudulent representations, the insurance company must prove that the representations were untrue, were made by the insured knowingly with the fraudulent intent to deceive, and that they were material to the risk and were relied upon by the defendant. Carpenter v. Sun Indemnity Co., 138 Neb. 552, 293 N.W. 400 (1940). The mere failure or omission to state the name of a physician and a treatment by him of some temporary indisposition or ailment will not avoid policy. McCleneghan v. London Guarantee & Accident Co., Ltd., 132 Neb. 131, 271 N.W. 276 (1937). Untrue answers in application for disability benefit contract, attached to life insurance policy, will avoid the policy where, if truth had been told, contract would not have been issued. Scott v. New England Mutual Life Ins. Co., 126 Neb. 514, 253 N.W. 685 (1934). Where false answer is inserted in application by agent of insurer, the applicant having made full and honest answers to agent's questions, the insurer cannot take advantage of such false statement to void the policy. Roth v. Employers Fire Ins. Co., 123 Neb. 300, 242 N.W. 612 (1932). Defense of fraud in action to recover on policy is not precluded and right of such defense is not defeated by showing that false statement did not contribute to loss. Goodell v. Union Automobile Ins. Co., 111 Neb. 228, 196 N.W. 112 (1923); Muhlbach v. Illinois Bankers Life Assn., 108 Neb. 146, 187 N.W. 787 (1922). Statements contained in application for insurance policy are not construed as warranties unless provisions of application and policy taken together leave no room for any other construction. Farmers Union Grain Co. v. U.S. Fidelity & Guaranty Co., 109 Neb. 142, 190 N.W. 221 (1922). Misrepresentations made in an application for fire insurance will not bar recovery on the policy if the misrepresentations do not contribute to the loss or deceive the insurer to its injury. Central Granaries Co. v. Nebraska L. M. Ins. Assn., 106 Neb. 80, 182 N.W. 582 (1921). Where the application for insurance did not correctly state the year in which the car was made, but did state facts from which the correct year could have been ascertained by the use of ordinary diligence, and where the car had been rebuilt, recovery on the policy is not barred as a matter of law by the insurer being deceived to its injury. Traynor v. Auto. Mut. Ins. Co., 105 Neb. 677, 181 N.W. 566 (1921). 2. Breach of condition Maintaining proof of an insured's qualification to perform a covered activity is the type of condition subsequent that this section was intended to address. Devese v. Transguard Ins. Co., 281 Neb. 733, 798 N.W.2d 614 (2011). The contribute-to-the-loss standard in this section applies to breaches of preloss conditions subsequent and continuing warranties that function as conditions subsequent. Regardless of an insurer's labeling, a clause in an insurance policy that requires an insured to avoid an increased hazard is a preloss condition subsequent for coverage. D & S Realty v. Markel Ins. Co., 280 Neb. 567, 789 N.W.2d 1 (2010). This section was intended to limit an insurer's ability to avoid liability for breach of increased hazard conditions which are so broad that an insured's violation of them is not causally relevant to the loss. D & S Realty v. Markel Ins. Co., 280 Neb. 567, 789 N.W.2d 1 (2010). This section does not relate to a breach of the terms of a policy which could arise only after the loss has occurred. This section relates to the question of a recoverable loss and not to the question of procedure to be followed in collecting for the loss. This section concerns warranties which are conditions precedent to the existence of an insurance contract, not with promissory warranties the fulfillment of which are conditions precedent to recovery. Coppi v. West Am. Ins. Co., 247 Neb. 1, 524 N.W.2d 804 (1994). The second sentence of this section has no application to a breach which could only arise after a loss has occurred. Ach v. Farmers Mut. Ins. Co., 191 Neb. 407, 215 N.W.2d 518 (1974); Clark v. State Farmers Ins. Co., 142 Neb. 483, 7 N.W.2d 71 (1974). Failure to give notice of replacement automobile is not a breach of contract under this section; rule regarding coverage under automatic insurance provisions for replacement automobiles stated. Christiansen v. Moore, 184 Neb. 818, 172 N.W.2d 620 (1969). Taking out of additional insurance, in violation of terms of policy, does not avoid the policy or permit the insurer to avoid liability where the breach did not contribute to the loss. Slafter v. New Brunswick Fire Ins. Co., 142 Neb. 209, 5 N.W.2d 217 (1942). Statutory provision that insured's breach of contract will not avail insurer to avoid liability unless it contributes to the loss, is by construction part of the insurance contract. Ware v. Home Mutual Ins. Assn., 135 Neb. 329, 281 N.W. 617 (1938). Breach of promissory warranty in policy of insurance against loss by theft to the effect that in case of damage to property the insured would use due care to protect the property from loss by theft, will prevent recovery on such policy for loss by theft, when such breach existed at time of such loss and contributed to the loss. Sanks v. St. Paul Fire & Marine Ins. Co., 131 Neb. 266, 267 N.W. 454 (1936). Where a breach of condition was not properly pleaded, the court refused to consider plaintiff's contention that the claimed breach did not contribute to the loss. Lehnherr v. Nat. Accident Ins. Co., 126 Neb. 199, 252 N.W. 823 (1934). Where insured horse was moved to a location not covered by policy and there killed by lightning, such unauthorized removal was breach of the policy contributing to the loss and defeating recovery thereon. Johnson v. Caledonian Ins. Co., 125 Neb. 759, 251 N.W. 821 (1933). Breach of conditions in fire policy as to procurement of insurer's consent to other insurance and failure of notice of foreclosure proceedings under junior mortgage, does not preclude recovery in absence of evidence that breach contributed to loss. Newman v. Nat. Union Fire Ins. Co., 122 Neb. 94, 239 N.W. 464 (1931). Violation of condition of insurance policy by removal of insured stock from place listed in policy does not invalidate insurance contract unless such removal contributed to the loss. Mayfield v. North River Ins. Co., 122 Neb. 63, 239 N.W. 197 (1931). Breach of condition in any insurance policy does not allow insurer to avoid liability unless such breach contributes to the loss. George v. Aetna Casualty & Surety Co., 121 Neb. 647, 238 N.W. 36 (1931). Violation of condition in fire insurance policy by mortgaging of property insured does not invalidate insurance unless breach of contract contributes to loss. Calnon v. Fidelity-Phenix Fire Ins. Co., 114 Neb. 194, 206 N.W. 765 (1925). In policy of insurance on livestock, removal of insured chattels from premises of owner does not invalidate insurance unless such breach of contract shall exist at time of and contribute to loss. Hannah v. American Live Stock Ins. Co., 111 Neb. 660, 197 N.W. 404 (1924). Breach of a condition in a fire insurance policy by mortgaging the insured chattels is no defense where such breach did not contribute to the loss. Security State Bank of Eddyville v. Aetna Ins. Co., 106 Neb. 126, 183 N.W. 92 (1921). Evidence raised a jury question as to whether the insured had used due diligence to maintain a sprinkler system in proper working order, as required by the policy, and, if not, whether such breach contributed to the loss. Liverpool & London & Globe Ins. Co. v. Nebraska Storage Warehouses, 96 F.2d 30 (8th Cir. 1938). Provision as to breach not invalidating policy unless existing at time of loss and contributing thereto, does not preclude defense that notice of loss on fidelity bond was not given in time. American Surety Co. v. Bankers' Savings & Loan Assn., 59 F.2d 577 (8th Cir. 1932). Where the only effect of a foreclosure suit had been to change the record title, the mortgagee's interest and lien remaining the same as before, breach of condition in fire policy requiring insured to notify the company of any change in title was no defense where breach did not contribute to the loss. Westchester Fire Ins. Co. v. Norfolk Bldg. & Loan Assn., 14 F.2d 524 (8th Cir. 1926). Statute providing that breach of condition shall not avoid policy, unless it existed at time of loss and contributed to loss, does not apply in the absence of contract relationship between the parties. St. Paul F. & M. Ins. Co. v. Ruddy, 299 F. 189 (8th Cir. 1924). 3. Miscellaneous The provisions of this section have no application to insurance policy provisions requiring the giving of notice of loss. First Security Bank v. New Hampshire Ins. Co., 232 Neb. 493, 441 N.W.2d 188 (1989). An insurer may unilaterally rescind an automobile liability policy contemplated by sections 44-514 to 44-521 under this provision. Lowry v. State Farm Mut. Auto. Ins. Co., 228 Neb. 171, 421 N.W.2d 775 (1988). This section relates to recission and sections 44-514 to 44-521 relate to termination or cancellation and are therefore not in conflict. As such, the right to recission as limited by this section is still available to an insurer regarding policies of the type defined in section 44-514. Glockel v. State Farm Mut. Auto. Ins. Co., 224 Neb. 598, 400 N.W.2d 250 (1987). Evidence failed to show that insurer relied on incomplete statement in application. MFA Mut. Ins. Co. v. Meisinger, 183 Neb. 285, 159 N.W.2d 829 (1968). Insurance company must be deceived to its injury to avoid loss under policy. Zimmerman v. Continental Cas. Co., 181 Neb. 654, 150 N.W.2d 268 (1967). This section does not apply to an excepted risk never assumed by the insurer. Krause v. Pacific Mutual Life Ins. Co., 141 Neb. 844, 5 N.W.2d 229 (1942). Where fire insurance policy provided as a condition of the insurance that the total insurance on the property should not exceed a sum named, and at the time, unknown to insurer, there existed other valid insurance in an amount greater than the sum so named, the latter policy does not take effect as a policy of insurance. Quisenberry v. National Fire Ins. Co., 132 Neb. 793, 273 N.W. 197 (1937). Where insured property was transferred to plaintiff without knowledge or consent of insurance company, plaintiff could not avail itself of provisions of above statute. Krug Park Amusement Co. v. New York Underwriters Ins. Co., 129 Neb. 239, 261 N.W. 364 (1935). Statute is part of every fire insurance contract in Nebraska. Weiner v. Aetna Ins. Co., 128 Neb. 575, 259 N.W. 507 (1935). Section does not apply to case where insurance company has never entered into contractual relations with person claiming under policy. Stephenson v. Germania Fire Ins. Co., 100 Neb. 456, 160 N.W. 962 (1916). This section does not invalidate a record warranty clause. Coppi v. West Am. Ins. Co., 2 Neb. App. 834, 516 N.W.2d 264 (1994). Statutory provisions are read into and constitute part of insurance contracts. Ohio Casualty Co. v. Swan, 89 F.2d 719 (8th Cir. 1937). Provision of fidelity bond by which company insures against losses discovered within duration of policy or two years thereafter was valid, notwithstanding above statute. American Employers' Ins. Co. v. Roundup Coal Mining Co., 73 F.2d 592 (8th Cir. 1934). Statute limiting effect of conditions in insurance policy is part of contract under fidelity bond. American Surety Co. v. Bankers' Savings & Loan Assn., 67 F.2d 803 (8th Cir. 1933). Section is part of fire insurance contract. Westchester Fire Ins. Co. v. Norfolk Bldg. & Loan Assn., 14 F.2d 524 (8th Cir. 1926).