Post Claims Underwriting: What To Do If You Have Been Accused Of A Material Misrepresentation

Post Claims Underwriting: What To Do If You Have Been Accused Of A Material Misrepresentation

Post Claims Underwriting: What To Do If You Have Been Accused Of A Material Misrepresentation

Imagine being involved in a motor vehicle accident, or any accident where insurance coverage is expected, and then being told that your claim is being denied due to a misrepresentation made in the application for insurance.  Talk about adding insult to injury or making a bad situation worse.  The insurance company that you chose to cover you, which has a legal obligation to act in good faith related to your claim, is abandoning you when you need them most.  Unfortunately, this is happening all through out the state of Florida, especially in the field of auto accident coverage and homeowners’ insurance coverage.  If this is happening to you, please call my office at 407-452-4918. 

If you have been accused of a material misrepresentation, it means that you have made a claim, your insurance company investigated the claim and the insurance company decided to deny the claim due to a misrepresentative statement made within the application, which they claim negatively affected their risk.  Not only does the insurance company intend to deny your claim, they intend to rescind your policy back to the date it was purchased and submit their claims decision to the Florida Department of Insurance Regulation.  Oh, and by the way, they intend to inform the Florida Department of Insurance Regulation that you committed a fraudulent insurance act, which is why they aren’t honoring the claim.  This could affect licenses (IE CDLs), your credit and your ability to obtain new insurance. 

It is hard to imagine a good faith reason for an insurance company to take such an action against their own customer after the benefit of bargain has come to be. This is called post claims underwriting.  If someone intentionally or negligently misrepresents something on their application for insurance, and but for the misrepresentation the insurance company would not have issued the policy or would have issued the policy at a significantly different rate, the denial is understandable. 

It is the insurance company’s burden to prove that: (1) a misrepresentation was made in the application; (2) the misrepresentation was material to their risk.  When an insurance company makes such a claims decision they are acting as judge, jury and executioner of their claim by giving the claimants no opportunity to dispute the misrepresentation.  Sometimes your own insurance company will even go so far as to file a lawsuit against you, which, if successful, would prevent you or any other entities that made claims under the policy from being compensated under the claim.  If you’re wondering who becomes responsible for the bills being denied under the claim, its YOU.

Obvious Defenses to a Material Misrepresentation:

  1. There is no misrepresentation.
    • The alleged misrepresentation is not true;
    • The insurance company knew or should of known of the information allegedly misrepresented;
    • The insurance company or an agent of the insurance company never asked the necessary questions.
  2. The misrepresentation would not have been material to the insurance company’s risk;
    • The insurance company would have issued the policy anyways (this is difficult to prove);
    • The misrepresentation would not have changed the price of the policy.
  3. The insurance company did not investigate the matter in timely manner.
    • Pursuant to Florida Statute 627.736(4)(i) the insurance company needs to notify the Claimant in writing 30 Days from the initiation of the Claim if they are investigating the claim;
    • If the insurance company properly notifies the claimant in 30 days, then they may investigate for up to 90 days from the initiation of the claims;
    • The investigation must be reasonable in time and scope;
  4. The insurance company must return their insured to the same position they were prior to the application;
    • The insurance company must return the policyholder’s premiums;
    • The insurance company must pay interest on the premiums;
    • The insurance company must return all of the fees they charge in the application.
  5. Parole Evidence could and should have been used to effectuate the Contract;
    • The Contract could have easily been modified as opposed to voided.
  6. The Insurance Company fails to notify the claimant of the difference in premium but for the alleged material misrepresentation (Florida Statute 627.70152)
  7. The Insurance Company’s Application or Policy is ambiguous;
    • The policy fails to define material misrepresentation or the alleged misrepresentation;
    • The application is subject to multiple interpretations;
    • The application and policy are commonly shells of the underwriting guidelines, which are ultimately used to rescind the policy;
  8. The actions of the insurance company are a violation of Public Policy;
    • By rescinding the policy the insurance company leaves their insured in a position were they were driving their vehicle without the minimum level of coverage.
  9. The claims decision is bad faith.
  10. The insurance company must produce their underwriting guidelines;
  11. The insurance company must enter an Examination Under Oath or Recorded Statement into evidence;
    • The statements are hearsay;
    • The statements are speculative;
    • The statements are biased.

Our firm represents insured, policyholders, claimants, medical providers, finance companies, homeowners, contractors, restoration companies and public adjusters who have been monetarily affected by an alleged material misrepresentation. 

If you are involved in a claim that is being investigated, you should call my office immediately. 

If an insurance company is attempting to return your premiums related to a material misrepresentation is important that you call my law firm before cashing the check. 

If you are currently unrepresented and being scheduled for an examination under oath or recorded statement related to the investigation you should call my office before participating in the investigation.