Life Insurance: Coverage Denials Based on Material Misrepresentations in the Application for Insurance
Florida life insurance companies will use any basis available to avoid making a life insurance payout. One tactic frequently employed by insurance companies is to deny coverage based on a misrepresentation in the insured’s application.
If you are understandably worried about a coverage denial based on an alleged material misrepresentation, know that the fight is far from over. An experienced Florida life insurance claims lawyer may be able to protect your legal rights and claim.
Even if an insurance company denies coverage based on Florida’s law on material misrepresentation, your life insurance lawyer can use the very same statute to fight any and all unfounded claim denials.
Insurance Companies Rely on Florida’s Material Misrepresentation Statute to Deny Claims
Sec. 627.409 of the Florida Statutes provides the legal basis for a life insurance company’s ability to deny coverage based on a misrepresentation in the insured’s application. This statute says that a “misrepresentation, omission, concealment of fact, or incorrect statement” can prevent a claim recovery.
- However, a claim can be denied only if the application misrepresentation in question is either fraudulent or “material” to the insurer’s assumed risk.
Most important to the application misrepresentation dispute, then, is whether the misrepresentation was indeed “material” to the insurer’s accepted risk or assumed hazard.
When Is a Misrepresentation “Material” in Nature?
Section 627.409(1)(b) of the Florida Statutes explains when a misrepresentation is material.
In its simplest terms, a material misrepresentation exists if the insurer would have issued a different policy, issued the same policy at a higher premium, or would not have issued the policy altogether had the true facts been made known on the application.
An obvious example in a life insurance context would occur if a smoker of 30 years answered “no” to a question asking if they had ever smoked cigarettes or used tobacco. Had the fact been made known that the applicant was a lifetime smoker, the life insurance company would have likely charged a higher premium for life insurance coverage ot not issued a policy, at all.
In such a scenario, the life insurance company would then void the policy and deny a coverage claim. Most scenarios involving a material misrepresentation are not this cut and dry, however.
Insurance companies will try to use any misrepresentation, however slight, to their advantage.
Examples of misrepresentations that may cause an insurance company to deny a claim include misrepresentations based on:
- Drinking and smoking history
- High-risk hobbies
- Employment history
- Certain medical history
Unintentional Material Misrepresentation Is Not a Defense
While the intent of the accused often plays an essential role in a criminal case, innocent mistakes made by the insured are not necessarily a viable defense against material misrepresentation claims.
This issue is exacerbated by the fact that insurance companies are not usually required to investigate an applicant’s answers at the time of polciy inception. Worse, the insurance company can verify those answers at a later date in order to deny a claim.
The fact that insurance companies can use even unintentional mistakes to allege a material misrepresentation and deny claims underscores the need for insureds to carefully review their answers on insurance applications before submitting same to the insurance company.
Not All Misrepresentations Are Material in Nature
- The mere fact that an insurance company claims a misrepresentation was material does not make it true.
- In fact, the insurance company has the burden of proving that a material misrepresentation exists.
Beneficiaries who are mourning the loss of a loved one don’t need to handle this fight alone. An experienced life insurance coverage denial lawyer may be able to assist in recovering the full value of the policy.
Building a strong case with evidence that proves a misrepresentation was not material to the insurer’s assumed risk is one way to protect the claim. This can be achieved either by proving that there was no misrepresentation whatsoever or demonstrating that the misrepresentation was not material to the insurer’s risk assumption. Another is to show that the contestability window has closed.
Section 627.455 of the Florida Statutes holds that an insured’s policy is contestable for two years after the policy is issued. As long as the insured paid premiums on time and did not commit fraud, insurance companies cannot deny coverage based on material misrepresentation once the contestability window has closed.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].
Sec. 627.409 Florida Statutes
Sec. 627.455 Florida Statutes