Misrepresentation Claims by Insurance Companies in Your Insurance Claim Dispute

In an effort to avoid paying valid insurance claims, insurance companies often deny payment by claiming that a policyholder has made material misrepresentations either before the policy was issued or after the policy was issued. For example, the insurance company may claim that an insured “lied” on the application for insurance. In Tennessee, Tenn. Code Ann. § 56-7-103 states:

“No written or oral misrepresentation or warranty made in the negotiations of a contract or policy of insurance, or in the application for contract or policy of insurance, by the insured or in the insured’s behalf, shall be deemed material or defeat or void the policy or prevent its attaching, unless the misrepresentation or warranty is made with actual intent to deceive, or unless the matter represented increases the risk of loss” (emphasis ours).

This section of the law applies to alleged misrepresentations during the application process, before the policy is delivered. Whether the law applies to an individual situation requires an in depth analysis of the argument being made by the insurance company and of the application process, as well as the potential negligence of the insurance agent if there are in fact mistakes on the insurance application.

Misrepresentation after a policy has been delivered

On the other hand, the insurance policy language governs the relationship between the policyholder and the insurance company, including any alleged material misrepresentations that the insurance company may claim to have occurred, after the policy was delivered. For example: let us say a policyholder suffers a house fire. He or she puts a claim in for the losses. The insurance company claims that the policyholder has made material misrepresentations in submitting his/her claim for insurance proceeds as to contents that were damaged/destroyed in a fire loss.

The policy will most likely deny coverage where material misrepresentations after made after delivery of the policy. This language is generally found under the general policy conditions with a heading of “Concealment” or “Fraud” that says the entire policy is void, if whether before, during, or after a loss, any insured has:

• Intentionally concealed or mispresented any material fact or circumstance;
• Engaged in fraudulent conduct; or
• Made false statements relating to this insurance

The language may differ from policy to policy, but the intent generally remains the same.

Once again, there are a variety of issues that arise in this context which must be analyzed to prevent an insurance company from seizing on an honest mistake by the policyholder (i.e. listing the wrong brand of toaster oven on their contents inventory) in an effort to avoid paying what is rightfully due and owing under the insurance policy.

Policyholders are entitled to the protection provided under their insurance policy and for which they have faithfully paid premiums in the event that disaster strikes. All too often, insurance companies try to use “honest” mistakes as a way to avoid paying valid claims. This is why you want a skilled Tennessee insurance dispute attorney on your side if your claim has been denied because of an alleged misrepresentation, or any other reason. McWherter Scott & Bobbitt protects the rights of policyholders in Nashville, Chattanooga, Memphis, and Jackson, and throughout Tennessee, in claims disputes and in bad faith actions. To schedule a consultation with Brandon McWherter, Clint Scott, or any Tennessee insurance claim dispute lawyer at our firm, please contact us.