BRADFORD, J.
… On January 11, 2002, Jerry French entered into a purchase agreement with Delaware County Mobile Home Sales to purchase a manufactured home for $76,950.00. Jerry contacted Jane Hodson, an independent insurance agent, about arranging insurance on the home.
Jerry and Hodson met a few days later, and Hodson asked him at least thirty-seven questions about his new home, the answers to which she entered into the Insurance-to-Value calculator (“the IV calculator”). During the IV calculator process, it is undisputed that Hodson did not ask Jerry if the home he wished to insure was a manufactured home or how much the home cost and that Jerry truthfully answered all of the questions put to him. According to Jerry, he told Hodson that the home was a manufactured home. According to Hodson, Jerry never told her that the home was a manufactured home, but that it was “under construction[,]” from which she inferred that it was a stick-built home. Appellant’s App. p. 338. Based on Jerry’s responses to Hodson’s questions, the IV calculator indicated that the total replacement cost for the Frenches’ home was $173,200.00.
Jerry signed the policy application, which stated that he was “responsible for selecting the appropriate amount of coverage[.]” Appellant’s App. p. 366. On July 9, 2002, State Farm issued a homeowners’ policy with dwelling coverage limits of $173,200 and an increased dwelling limit endorsement of $34,640, which provided in part that State Farm would “pay up to the applicable limit of liability … the reasonable and necessary cost to repair or replace with similar construction and for the same use on the premises … the damaged part of the property.” Appellant’s App. p. 187. On February 12, 2003, the Frenches’ home was substantially destroyed by a fire, the cause of which has never been determined.
The day after the fire, a State Farm adjuster went to the site and learned that the Frenches’ home was a manufactured home. The adjuster told the Frenches that they could use an amount up to the policy limits to rebuild their home and sent them a letter stating that they could choose a contractor to perform the repairs. The Frenches were reluctant to purchase another manufactured home and expressed their desire to construct a “stick-built” home on the existing foundation. On March 14, 2003, State Farm offered to pay the Frenches the cost of replacing their manufactured home with the same model, which totaled $82,483.50. The Frenches accepted this amount but reserved the right to seek additional coverage under the policy. The Frenches’ stick-built home cost over $180,000.
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III. Reformation or Rescission
State Farm contends that designated evidence could support a finding that it is entitled to . . . rescission of the policy based on concealment of material facts by the Frenches.
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State Farm contends that it is entitled to trial on the question of whether it may rescind the insurance contract entirely based on the Frenches’ concealment of the purchase price of the manufactured home or the fact that it was manufactured home. As an initial matter, the Frenches contend that State Farm cannot rescind the contract under any circumstances because it has failed to make a tender of premiums.
The function of contract rescission is to restore the parties to their pre-contract position, that is, the status quo. Gary National Bank v. Crown Life Ins. Co. (1979), Ind. App., 392 N.E.2d 1180. It is therefore basic that a party seeking rescission must return all consideration or benefits received under the contract. Smeekens v. Bertrand (1974), 262 Ind. 50, 311 N.E.2d 431; Blaising v. Mills (1978), Ind. App., 374 N.E.2d 1166; Berry-Jefferson Corporation v. Gross (1977), Ind. App., 358 N.E.2d 757.
This means that when an insurance company seeks to rescind a policy on the grounds of a material misrepresentation in an application, generally it must first make a tender of the full amount of premiums paid under the policy. This is to restore the parties to the position they were in prior to the contract by returning the consideration the insurance company has received. Prudential Ins. Co. v. Smith (1952), 231 Ind. 403, 108 N.E.2d 61; Gary National Bank v. Crown Life Insurance Company, supra.
Although infrequent, there is an exception to this rule. It is conveniently summarized in 6 Couch on Insurance (2d ed. 1961) s 34:35 at 779:
Notwithstanding the general rule that, in order to avoid liability on a policy there must be a prompt tender of premiums, such a tender is not necessary where … the insurer has paid a claim thereon which is greater in amount than the premiums paid.
See also Appleman, Insurance Law & Practice (Burdal Ed. 1979) s 1832. Am. Std. Ins. Co. v. Durham, 403 N.E.2d 879, 881 (Ind. Ct. App. 1980). We conclude that State Farm’s failure to make a tender of premiums will not act as a bar to its rescission claim. The designated evidence indicates that State Farm has paid the Frenches a total of $261,155.01 related to the loss. The designated evidence also indicates that the Frenches’ yearly homeowners’ insurance premium was $438.00, of which they had apparently only paid one annual payment at the time of the fire. State Farm has already paid out far more than the premiums paid, so its failure to make a tender of them does not bar its rescission claim.
Turning to the merits, State Farm has designated evidence that Jerry never told Hodson that the home was manufactured or what it cost but did tell her that it was under construction. As previously mentioned, it is undisputed that no attempt to elicit information regarding cost or mode of construction was made during the application process and that Jerry truthfully answered all of Hodson’s questions.
As a general rule, [a]n insurer may cancel a policy if representations in an application are (1) false; and (2) material to the risk involved. Prudential Insurance Co. of America v. Winans (1975), 263 Ind. 111, 325 N.E.2d 204, 206. The determination of whether the misrepresentation, intentional or innocent, is material is a question for the trier of fact unless the evidence is such that there can be no reasonable difference of opinion. Id. A representation is “material” if the fact omitted or misstated, if truly stated, might reasonably have influenced the insurer in deciding whether to reject or accept the risk or charge a higher premium. Bush v. Washington National Ins. Co. (1989), Ind. App., 534 N.E.2d 1139, 1142, transfer denied. Like any other contract, an insurance contract may be avoided by false representations which mislead, regardless of whether the representation was innocently made or made with a fraudulent intent. Id.
Watson v. Golden Rule Ins. Co., 564 N.E.2d 302, 304 (Ind. Ct. App. 1990). “It is essential for recovery that the insurer must have been deceived by the misrepresentations and he must have acted in reliance upon them.” State Farm Mut. Auto. Ins. Co. v. Price, 181 Ind. App. 258, 260, 396 N.E.2d 134, 136 (Ind. Ct. App. 1979).
As previously mentioned, Hodson testified that Jerry told her that the home was “under construction[,]” from which she testified that she inferred that it was of stick-built construction. Appellant’s App. p. 338. Even assuming, as we must, that Jerry made the above statement, we conclude that it does not rise to the level of a potential misrepresentation regarding the nature of his home. We find it most significant that Hodson’s deposition testimony does not indicate that Jerry told her the home was under construction at any particular location, much less on site. Manufactured homes must be constructed, after all, and Jerry’s alleged statement, without mention of a location, is just as consistent with a manufactured home as with a stick-built one.
At most, then, the situation was one of concealment or failure to disclose the value or true nature of the home. There are, of course, sins of omission as well as of commission, although no Indiana case has squarely addressed the question of whether failure to disclose a material fact leads to the same result as a misrepresentation. Several foreign cases have addressed the question of whether failure to disclose information regarding the value of insured property operates to relieve the insurer of liability, and, at least when limited to cases involving real estate, the cases uniformly hold that concealment or failure to disclose true value will not allow rescission on that basis.
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We find the reasoning of the real estate cases to be persuasive and so adopt the seemingly unanimous position that failure to disclose true value in a real estate insurance context will not give rise to a rescission claim. Some of the real estate cases cited above specifically note that the insurance company did not inspect the property in question before issuing coverage, as was the case here. This strikes us as a valid point, and one on which the real estate cases can be readily distinguished from the personal property cases that reach opposite conclusions. Here, for example, it would have been a simple matter for a State Farm agent to visit the Frenches’ home, at which point it would have been immediately apparent that it was a manufactured home, even without going inside. In contrast, the true value of personal property, such as an art collection, would be much more difficult for the insurer to ascertain. Moreover, both of the personal property cases cited above contain additional circumstances that further distinguish them from this case. The Lattimore court relied in large part on a California statute that has no Indiana equivalent, and the Stone court relied heavily on a provision in the insurance application that required the applicant to provide any other material facts within his knowledge, neither of which applies here. We conclude that even if Jerry concealed or failed to disclose the true value or nature of his manufactured home, such does not give rise to a claim of rescission by State Farm. We do not think it is an unreasonable rule that insurance companies fail to ascertain the true value of insured real property at their peril, as they are in a far better position to accurately ascertain that value than most homeowners. We remand with instructions to enter summary judgment in favor of the Frenches on this claim.
BAKER, J., and CRONE, J., concur.