Life Insurance Claim Denial Due to Material Misrepresentation
As Miami life Insurance Claims attorneys we understand that material misrepresentation is one of the most common reasons cited to deny coverage. So what is a material misrepresentation? In simple terms, a material misrepresentation is a fact or statement that was not disclosed to an insurer and that would ultimately affect the decision to provide coverage. In other words, a material misrepresentation is an omitted or negated fact that would result in lack of insurance coverage in the first place. In many cases issues of material misrepresentations deal with questions of the insured's medical history. Other examples include:
- Hobbies/dangerous activities.
- Profession or work.
- Other policies owned by insured.
- Tabaco use.
- Alcohol use.
- Employment history.
Below you will find the statute that is relevant to material misrepresentation in Florida:
627.409 Representations in applications; warranties.--
- (1)Any statement or description made by or on behalf of an insured or annuitant in an application for an insurance policy or annuity contract, or in negotiations for a policy or contract, is a representation and is not a warranty. A misrepresentation, omission, 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 the loss.
The insurance company will deny the claim even if the death is not related to the material misrepresentation. However, not every omission amounts to a material misrepresentation. The burden here is on the insurance company. The insurance company would have to show that had it known the omitted or misrepresented fact, then it would have not provided coverage or requested a higher premium. It should be noted, a grief stricken beneficiary will most likely be perplexed over any reasoning provided by an insurance company. Such a denial only adds more complexity to an already life altering and traumatic circumstance. Nonetheless, as Fort Lauderdale life insurance attorneys we understand the modus operandi of insurance companies. The process by which an insurance company alleges misrepresentation and attempts to nullify the policy is called recession. As mentioned above, the basis of the recession action is showing that a material representation exists, and that had the insurance company know it would not have provided coverage.
Underwriting guidelines are the key to determining whether a material misrepresentation is present. A conclusion by an underwriter alone is insufficient to determine that a material misrepresentation exists. The underwriting guidelines may be effective in order to determine whether certain standard were ignored during the underwriting process, while others are stressed in the denial. This is to show that the standards to investigate the underwriting and the death may be different. Nonetheless, if the insurance company can find any cause to allege misrepresentation, then they most likely will. They do this to test the will of the beneficiary(s). If your claim for benefits is denied, then hire a Miami-Dade life insurance lawyer right away.
It is important to note that Florida requires an "entire contract" clause. This means that the application for coverage becomes part of the policy/contract itself. Florida Statute 627.606 provides, "every insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended, or modified by any application therefor or any rider or endorsement thereto." This is the reason why the issue of a material misrepresentation becomes relevant and a basis for denial by the insurance company.
South Florida life insurance lawyers are here to assist 24/7. If you need any assistance please call 1.888.413.8353.