Avoiding Claim Denial Because of Application Errors

As residents of Tennessee gear up for a few months of unpredictable winter weather, it is crucial to ensure that your property insurance is in order. One often overlooked aspect that could lead to claim denials is the accuracy of your insurance application. Even seemingly minor errors completely unrelated to the damage you suffer may be sufficient grounds for total claim denial. In this blog post, we’ll delve into the implications of inaccuracies in your insurance application and provide practical steps to safeguard your coverage.

The Case of Jesmer v. Erie Insurance Co.

In 2021, the 6th Circuit Court of Appeals ruled in favor of the insurance company, supporting their decision to deny a claim based on errors found in the policyholder’s application. The plaintiff worked as a tow truck driver and stored tow trucks, and occasionally other vehicles, at his residence. When he applied for a residential insurance policy, he answered “no” to the agent’s question regarding whether he engaged in any business or occupational pursuits at the property location. Later, his home suffered a devastating fire loss and his claim was totally denied because of this inaccuracy—though unrelated to the loss—on his application.

The Court reiterated that if there is false information on the application, and the insurer can prove that the false information was either given with the intent to deceive or the false information increased the risk of the insurer’s loss, the policy is void. This essentially means that even if you mistakenly get something wrong on your application, if it involves the type of conditions or circumstances that may affect the insurer’s calculation of the risk, the premium, or the decision to issue the policy, your claim can be denied. This case is a recent illustration of the importance of complete and accurate information in insurance applications, regardless of the nature of the question.

Implications for Policyholders

The Jesmer case highlights the potential consequences of inaccuracies in insurance applications. Any factual misrepresentation, intentional or not, can give insurance companies grounds to deny claims entirely. It is crucial for policyholders to understand that even seemingly minor details like an old DUI (Smith v. Tenn. Farmers Life Reassurance Co., 210 S.W.3d 584, 590-91 (Tenn. Ct. App. 2006)), or an undisclosed foreclosure (Conley v. Tenn. Farmers Ins. Co., 2018 Tenn. App. LEXIS 428) can have a significant impact on the outcome of a claim.

Keep in mind that the insurance company will attempt to hold you responsible for the information contained in your application, even if you do not read it.

Taking Action: Requesting and Reviewing Your Insurance Application

When taking proactive measures to protect yourself and your home, consider requesting a copy of your insurance application from your agent and thoroughly review it for accuracy. Ensure that all information, including personal details, property information, and any disclosure requirements, is complete and truthful.

Steps to Safeguard Your Coverage

1. Request Your Application: Reach out to your insurance agent and request a copy of your original insurance application.
2. Thoroughly Review: Carefully go through the application, checking for accuracy in all provided information. Pay close attention to details such as claim history, criminal history, property ownership details, and any business activities, which might be overlooked but can have serious consequences.
3. Update Information if Necessary: If you identify any inaccuracies, promptly inform your insurance agent and update the information. It’s better to address and correct any errors before they become the basis for a claim denial.
4. Maintain Open Communication: Establish and maintain open communication with your insurance provider. Keep them informed of any changes in your circumstances that may affect your coverage.

Tennesseans must be proactive in safeguarding their insurance coverage before disaster strikes. By reviewing and updating your information now, you can mitigate the risk of claim denials in the event of unforeseen incidents during the upcoming storm seasons. Don’t wait until it’s too late. Also, not all denials based upon misrepresentation are valid so, if your claim is denied for misrepresentation/inaccuracies in the insurance application, call or contact McWherter Scott & Bobbitt today. With offices throughout Tennessee, Kentucky, and Mississippi, we are always here when you need help.