Slate’s Law Blog

Insurance Company Applications: How Insurance Companies Use Material Misrepresentation Accusations to Deny Claims

insurance company bad faith

What is Material Misrepresentation in Insurance Company Applications?

When you apply for auto insurance, you answer a number of personal questions on the insurance company applications. The insurance underwriters then use the information you gave them to determine your premium. These questions often include information about your health, previous accidents you have been in, and details about your vehicle.

There are two important facts about the insurance application that applicants often overlook. First, the insurance company is not obligated to investigate the answers you provide before offering you coverage and accepting your premium payments. Secondly, they have the right to verify your answers at any time. This means that the insurance company can investigate your application answers after you file a claim for an accident.

Usually the insurance company does not stand to benefit from thoroughly investigating your application before approving you for a policy. Thus, they are unlikely to look into your answers until a claim is filed. This is when they can find “misrepresentations” in your application and use them to deny your claim.

The insurance company can use any inaccurate answer on your application as a reason to deny your claim. Not only can the insurance company deny your claim, but they can cancel your coverage as well.

What if the Misrepresentation was Unintentional?

Unfortunately, intent does not matter in the eyes of the court when it comes to material misrepresentation. Most of the time, this defense is used against applicants who made unintentional errors that did not seem significant at the time. However, any incorrect answer that could have resulted in the insurance company offering you a different premium can be counted as material misrepresentation. Some common errors on insurance applications that companies use to deny claims are:

  • Your vehicle was parked on the street, but you claimed that it was garage parked
  • You have a child in the home who is of driving age who was not listed on your application
  • Your vehicle has aftermarket tires, but you said it was not modified

What’s more, the inaccuracy on your application does not even have to have a connection to the accident for the insurance company to use it as a reason to deny your claim. So the fact that you parked your vehicle in a different location than what is listed on your insurance application could result in the insurance company denying what should be a straightforward fender bender claim.

Avoid the Pitfall

The best way to avoid dealing with a material misrepresentation defense by your insurance company is to carefully and accurately answer the questions on your insurance application. If you have a question about something on the application, do not hesitate hesitate to ask for clarification. However, be aware that insurance salesperson is not an underwriter, so they might not even be aware of all the potential pitfalls. Be diligent in answering everything accurately—even questions that do not seem important. These minor details can end up being the very reason your claim is denied.

Here are some tips for avoiding mistakes on your insurance application:

  1. Report every driver in the house.
  2. Accurately list the parking location of the vehicle.
  3. List the exact mileage of the vehicle—don’t estimate.
  4. If you ever use your vehicle for business, even just occasionally, be sure to report that the vehicle is used for business.
  5. Never omit a driving infraction or accident you have been involved in.
  6. Update your information any time something changes.

Get Help from Attorneys Experienced with the Insurance Company Game

If you have been injured in an accident and the insurance company is using an alleged inaccuracy on your insurance application to deny your claim, you need help from a professional law firm. Slate Stern Law can help.

If you have been injured in an auto accident and want to discuss your legal options, contact us today at (505) 814-1517 for a free consultation with an experienced personal injury lawyer.