There are many defenses and tactics that insurance companies use to avoid paying legitimate claims brought by policyholders.
One of the most common defenses used by insurance carriers involves the allegation that an insured has made a material misrepresentation in the application for insurance. While such misrepresentations involve the process of applying for insurance, many policyholders are unaware that there were any issues with the information provided in their application until after they file a claim for a loss. This practice of sandbagging policyholders is common.
This insurance company defense to paying claims arises out of Florida Statute §627.409, which provides in pertinent part:
“A misrepresentation, omission or concealment of fact, or incorrect statement may prevent recovery under the contract or policy only if any of the following apply:
(a)The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer.
(b)If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in loss.”
This language makes clear that inaccuracies or omitted information in an insurance application alone are not a sufficient basis to deny an insurance claim. This defense may only justifiy a denial of a claim if the nature of the subject information would have impacted the amount of the premium charged, amount of coverage issued or the decision to provide coverage at all if the questioned information had been disclosed to the insurance company. In other words, the information at issue must impact the degree of risk in a way that would be relevant to the underwriting process.
When analyzing an insurance policy application to determine if a non-disclosure or inaccuracy would justify denying coverage, any ambiguity must be interpreted in a manner most favorable to the policyholder. The standard principle of contract interpretation that justifies this reasoning is that ambiguities in the contract must be construed against the party responsible for drafting the contract/insurance policy.
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].