All posts by barryzalma

Zalma on Insurance – Second Edition

Zalma on Insurance Claims Volume 101″ – Second Edition

A Comprehensive Review of insurance, insurance claims, the law of insurance and policy interpretation Paperback – July 17, 2019

This volume covers


The author has provided checklists, sample procedures, form letters, tables and information and references to model statutes, state statutes, administrative regulations, and requirements of insurance departments nationwide.

Available as a paperback

Available as a Kindle Book

Zalma on Insurance Claims Part 102 – Second Edition”

This the second edition of the second volume in the latest addition to Barry Zalma’s insurance claims series of books and articles is part of the most thorough, up-to-date, expert-authored insurance claims guide available today. Zalma on Insurance Claims, part 102 provides in-depth explanations, analysis, examples, and detailed discussion of: •  Other Insurance Clauses; •   Trigger of Coverage; •    Underwriting; •    Conditions, Warranties and Exclusions

The author has provided checklists, sample procedures, form letters, tables and information and references to model statutes, state statutes, administrative regulations, and requirements of insurance departments nationwide.

Available as a Kindle book

Available as a paperback 

Zalma on Insurance Claims Part 103 Second Edition:

A Comprehensive Review of the law and Practicalities of Property, Casualty and Liability Insurance Claims. Insured, Insurer, adjusting.

The Implied Covenant of Good Faith and Fair Dealing

The principle on which insurance has existed for the last three to four centuries is that insurance business is conducted with the utmost good faith (uberrima fides). The principle, called a covenant of good faith and fair dealing, must be followed religiously by both the insurer and the insured. This means, simply, that both parties to the insurance contract must treat each other in such a way that neither will deprive the other of the benefits of the contract.

This, the third part of Zalma on Insurance Claims and includes materials concerning:
This is part 103 of Zalma on Insurance Claims and will deal with:

•The Covenant of Good Faith and Fair Dealing
•Duties of the Insured and the Insurer
•Declaring a Policy Void
•Processing a Claim
When read with Part 101 and Part 102, this volume works to take the reader to a complete understanding of insurance and insurance claims.

Available as a Kindle Book

Available as a paperback

Zalma on Insurance Claims Part 104″

This, the fourth volume of Zalma on Insurance Claims and includes materials concerning:

  1. Investigation of First Party Property Claims
  2. Rescission
  3. The Mortgage Clause
  4. Fortuity & Other Issues
  5. Determine the Amount of the Loss
  6. The Claim File

When read with Part 101, Part 102, and Part 103, this volume works to take the reader to a complete understanding of insurance and insurance claims.

Zalma on Insurance Claims Part 105″

This, the fifth volume of Zalma on Insurance Claims and includes materials concerning:

  1. Investigation – Liability
  2. Claims Made and Reported Policies
  3. The Notice Prejudice Rule.
  4. Types of Torts
  5. The Liability Claims File
  6. Discovery of the Insurance Claims File
  7. Tests for Determining Duty to Defend
  8. Appendices – forms for the claims person

When read with Insurance 101, Insurance 102, Insurance 103 and 104, this volume works to take the reader to a complete understanding of insurance and insurance claims.

Lies About Criminal Convictions on Application Voids Coverage

Policy Void From Its Inception – No Duty to Defend

The implied covenant of good faith and fair dealing applies equally on the person insured as it applies to an insurer. When a person applies for insurance and misrepresents material facts the covenant is breached and the insurer has the right to seek a court order that the policy is rescinded from its inception and that any duty to defend on the policy does not exist since rescission establishes that the policy never existed.

In Philadelphia Indemnity Insurance Company v. William Asperi, Civil Action No. 18-cv-02372-CMA-NRN, United States District Court for the District of Colorado (February 13, 2019) Philadelphia Indemnity Insurance Company’s asked the USDC for Default Judgment as Against William Asperi and an declaration that its policy was void from its inception.


On November 14, 2014, Defendant completed a Professional Liability Insurance Application and submitted it to Plaintiff. As part of the application, Plaintiff made a number of false representations, including that he had never been convicted of a misdemeanor or a felony. Based on the information in the application, Plaintiff issued an Allied Healthcare Providers Professional and Supplemental Liability Insurance Policy (the “Policy”), which was effective from November 14, 2014, to November 14, 2015. The terms of the Policy provides: “We will pay on your behalf those sums that you become legally obligated to pay as damages because of a professional incident that takes place in the coverage territory and occurs during the policy period. The professional incident must result from the practice of the profession shown in the Declarations.”


On June 20, 2017, Tabatha Goodrich filed a complaint against Defendant in Denver County District Court, case number 2017CV32255 (the “underlying lawsuit”). In the underlying lawsuit, Ms. Goodrich indicated that beginning in January 2015, she had been treated by Defendant, who claimed to be a “Registered Psychotherapist in the State of Colorado


held himself out as having knowledge and skill in the field of neuropsychology and psychology.”  She also alleged that Defendant’s registration was based on Defendant’s submission of “false, misleading, incomplete and fraudulent information in his Application for Registration with the Colorado State Board.” Specifically, he lied to the Board, with regard to his physical and mental condition and his criminal record.  Defendant was suspended from the practice of psychotherapy on September 22, 2015.

Defendant’s fraudulently obtained credentials allowed him to provide mental health services to Ms. Goodrich.  Defendant spent substantial time psychoanalyzing Ms. Goodrich, “telling her that he was trying to find out what was wrong with her,” and he eventually diagnosed Ms. Goodrich with Borderline Personality Disorder. Ms. Goodrich subsequently became pregnant as a result of her relationship with Defendant. Defendant’s conduct gave rise to the underlying lawsuit in which Ms. Goodrich sued Defendant for multiple claims including negligence.

Plaintiff was provided notice of the underlying lawsuit on August 11, 2017, and Plaintiff is currently providing a defense to Defendant pursuant to a reservation of rights. Plaintiff sued seeking declaratory relief with respect to the validity of the Policy and argues that the Policy should be declared void because Defendant made material misrepresentations in the application on which the Policy was based.


Plaintiff served Defendant via personal service on November 16, 2018. Defendant has nevertheless failed to answer the Complaint or otherwise respond, and the time to do so has long since expired.


Under Colorado law, when a policyholder misrepresents material facts to obtain insurance, the provisions obtained under those circumstances are void from their inception. Materiality is established if a false or concealed fact materially affected either the risk accepted or the hazard insured against such that the insurer would not have included the coverage provision had it been truthfully informed.

In the instant case, Plaintiff has shown that it may void the Policy. Defendant explicitly represented that he had never been convicted of a misdemeanor or a felony. Moreover, by executing the agreement, Defendant acknowledged that he understood “that incorrect information could void the insurance coverage.”

In fact, Defendant had a lengthy criminal record that spanned more than two decades, and included more than two dozen criminal cases and a felony conviction before he applied for insurance with Plaintiff in 2014. Therefore, Defendant misrepresented facts in his insurance application.

Plaintiff’s decision to issue coverage was made in reliance on Defendant’s misrepresentations and Plaintiff would not have issued the coverage if it had truthful information. Therefore, the Policy was void ab initio, which is to say void from its inception.

Where, as here, a contract is void ab initio, the party penalized has no rights thereunder. Accordingly, this void Policy does not impose on Plaintiff any duty to defend or indemnify Defendant for any claim related to the underlying law suit. Therefore, Plaintiff does not owe Defendant a duty of defense or indemnification with respect to the underlying lawsuit.


Insurers are compelled, by the covenant of good faith and fair dealing, to believe the facts represented by a prospective insured at the time of the application since the cost of investigating each fact represented would be prohibitive and since almost 100% of prospective insureds are honest and forthright. Misrepresentations are usually discovered when a claim is presented. In this case it was obvious since the underlying suit alleged that the insured lied to the licensing board with lies that were also material to the insurer.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Arson for Profit

“Arson for Profit: How an Attempt to use Arson & Fraud to Fund Terrorism Failed”

This story is based on a real case involving a member of Russian/Armenian organized crime, real insurers, investigators, lawyers, fire fighters, and insurance brokers. The names, descriptions, and identities of the people involved have been changed to protect both the guilty and the innocent. The report to the US Senate, after this case was decided by the California Courts, reveal that the threats made on MOM and lawyer Hazan were real and they are lucky that the threats were never fulfilled. The person identified in this story as Levonyan was described to the US Senate as the leader of a Russian/Armenian organized crime ring. It is important to take seriously threats from criminals. Insurance fraud and arson-for-profit are not victimless crimes. They are crimes of violence that cost everyone who lives in the U.S.]

Available as paperback.

Available as a Kindle Book.

Insurance 101 – Chapter 16 Volume 95 – FRAUD CHECKLIST


Response to fraud checklist.

The following video was adapted from my book, “Insurance Claims A Comprehensive Guide” Published by the National Underwriter Company and is available at the Zalma Insurance Claims Library

Legal Disclaimer

The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.