If you lie on an application for auto, life, health or disability insurance, you may find yourself without much-needed coverage. Unfortunately, some people, in an effort to reduce their premiums, grossly misrepresent the facts.
In January, the Supreme Court of Virginia upheld the denial of benefits to be paid to a seriously injured automobile accident victim, because the owner of the car in which the victim was injured had failed to disclose all of the potential drivers who were living at the household and might have access to the car. The court ruled that there were several places on the application where this question was asked and each time the policyholder failed to disclose that a 21-year-old relative was living in the house.
That 21-year-old relative was the driver of a car in a single-car accident that seriously injured its passenger, costing hundreds of thousands of dollars in medical bills. When her claim was made to the insurance company, there was an investigation and the insurance company ultimately denied coverage because it said that had it known of the young driver, it likely would have sold the policy at a substantially higher price. The Supreme Court ruled that this was a material misstatement of fact which nullified the policy.
Unfortunately, over the years families have been left financially devastated when someone bought medical or life insurance benefits and failed to disclose relative past medical history. We can guarantee you that after you’re gone, the insurance company will investigate the truthfulness of your application and if it finds that you made material misrepresentations, your widowed spouse will be coming to our firm, but we will be telling her that we can’t help her and the children. Be honest.
