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A video explaining the reasons for rejecting a claim



Watch the full video at https://rumble.com/vqdepg-a-video-explaining-grounds-for-denying-a-claim.html?mref=6zof&mrefc=2 and at https://youtu.be/N-70RoGOFbY

To constitute fraud, an insured person must have concealed or distorted a material fact in order to persuade an insurer to pay a claim that it would not, otherwise be liable if it had known to true facts. The facts that are considered "essential" for the purpose of rejecting a claim or invalidating an insurance policy are not clearly defined and therefore each case must be evaluated separately.

In general, a fact is essential for the application for insurance if it could have affected a reasonable insurer in the decision to accept or reject the risk on the same terms. Significant facts that are intentionally concealed or distorted with the intent to mislead the insurer and that lead to damage to the insurer are fraudulent. Fraud, at the insurer's choice, allows the insurer to invalidate the insurance. A misrepresentation after a loss of a single essential fact will forfeit the entire insurance contract.

An insured can not commit a "small" fraud as little as he can only be a little dead. Once the insured has been involved in a minor fraud, he or she can not demand that he or she be paid for the legitimate part of the claim and expect the insurer to forgive the attempted fraud.

Determining the existence of a "misrepresentation" is not always easy. I Suggs v. State Farm Fire and Casualty. Co. 833 F.2d 883 (10th ed. 1987), a first investigation by an insurer and the state fire marshal concluded that a house fire was the result of arson. The fire brigade further came to the conclusion that it was the insured who ignited the fire. The insured was arrested and charged with arson.

With ongoing prosecution, the insured hired experts who concluded that the fire was probably caused by an electrical fault. The criminal proceedings were then dropped. Another expert hired by the insurer later concluded that the fire was not of electrical origin, and the insurer denied the insured's fire damage claim on the grounds that the insured had intentionally ignited the fire. The insured responded by bringing an action for benefits under the insurance, as well as for bad faith. A jury found in favor of the insured on both grounds of action.

Following an appeal, the Tenth Circuit overturned the judgment in bad faith. The cessation of the prosecution for arson was found to be insignificant because the handling of criminal cases requires criteria other than civil cases. In any case, there was substantial contradictory evidence regarding the nature of the fire. Based on this conflict, the court Suggs considered that the only reasonable conclusion that the jury could have reached was that the insurer had not acted in bad faith. The insurer had good reason to believe that the insured, Suggs, had misrepresented facts of importance to the claim by denying that he had started the fire. The insurer could not convince the jury that the insured was lying but managed to convince the Tenth District Court that the denial was made in good faith.

Although this case resulted in a favorable or partially favorable judgment on behalf of the insurance company. The insurer reveals the need to act fairly and in good faith with all insured persons and to an even greater extent with insured persons suspected of fraud. If the insurer treats the suspected fraud with the utmost good faith, it will avoid unnecessary litigation, will have sufficient facts to reject a claim and will explain to the insured all the reasons for the refusal. an application

In some states, such as California and New York, when incorrect representations of material facts are made in an insurance application, the presence of a fraudulent intent to mislead is not decisive in avoiding the insurance. In these states, by applying what has been called the "marine rule", a policy can be revoked (that is, annulled from its inception) for an innocent misrepresentation or concealment of an essential fact.

In making a claim, the insured document must, however, have had the purpose of deceiving the insurer. Even a gross overvaluation of a claim will not allow an insurer to deny the entire claim or invalidate the insurance unless the insurer can prove that the overvaluation was not an honest mistake.

Fraudulent purpose

Courts in various states have difficulty. with the concept of fraud and fraudulent intent. I Auto-Owners Ins. Co. v. Hansen Housing, Inc. 604 N.W. 2d 504, 514 (S.D. 2000), the Supreme Court of South Dakota affirmed that excessive claims for the purpose of gaining an advantage in conciliation negotiations are considered attempted fraud, even if the insured does not expect to ultimately receive more than their actual loss. On the other hand, that court recognizes that there may be an honest misrepresentation of certain facts and that although fraud and perjury will, as a general rule, invalidate the insurance, only mistakes in stating facts which do not in themselves invalidate its terms and do not appear be intentional misrepresentations will not defeat the act. It is up to the jury, with instructions from the court, to decide whether the misrepresentation is a "mere mistake" or an intentional attempt to mislead. The insurer can prove trust in the application process by showing that it has issued an insurance based on the insured's fraud which it would not otherwise have issued.

Pursuant to New York Penal Code § 176.05 (1), a fraudulent insurance policy consists of the presentation for fraudulent purposes of a false written statement in connection with an insurance policy for either commercial or personal insurance. [ People v. Boothe 68 AD3d 402, 2009 NY Slip Op 8859, 890 NYS2d 484 (NY App. Div. 2009)]

. the statement in question in the application was made in good faith and without fraudulent intent. The Michigan Court of Appeal concluded that it is unnecessary for an insurer to show fraudulent intentions to terminate an insurance policy in which an applicant makes a material error regarding previous medical history. [WiedmayervMidlandMutualLifeInsCo 108 Mich.App. 96, 100, 310 N.W.2d 285 (1981); Legel v. American Community Mut. Ins. Co ., 506 N.W.2d 530, 201 Mich.App. 617 (Mich. App. 1993)]

Fraudulent intentions are seldom susceptible to direct evidence and must usually be established by clues and the legitimate conclusion arising therefrom. [ Barkley v. United Homes, LLC 2012 WL 2357295, at * 8 (EDNY June 20, 2012) (internal citation omitted).] A conclusion of fraudulent intent can be established by showing a motive for committing fraud or by identifying the intentional conduct of the accused party. [ Enzo Biochem, Inc. v. Johnson & Johnson 1992 WL 309613, at * 11 (S.D.N.Y. 15 Oct. 1992) (internal citation omitted) (change in original); Gov’t Emps. Ins. Co. v. Jacobson (E.D. N.Y. 2021)

Determination of materiality

The materiality of false statements is determined by the result it would have on the insurer, its insurer or the injured party. The materiality is not determined by whether the statements are about a topic that is later judged to be unimportant. For example, if false information is given about factors other than those that caused a loss, the false information is still essential.

Incorrect statements are always essential. False information is essential if it may have influenced the insurer's attitude and actions. They are just as important if they were intended to deter, mislead or divert the company's investigation into any area. A fact is essential to a claim if it concerns a subject that is relevant and relevant to the insurer's investigation of the claim.

Based on the evidence presented by an insurer, GEICO, a reasonable jury can conclude that the person seeking benefits from the insurer, acted with fraudulent intent. Courts have regularly held that a physician's financial motive for obtaining insurance benefits without error by making intentional misrepresentations to an insurance company is sufficient to prove a scientist or malicious intent. [ Gov’t Emps. Ins. Co. v. Badia, 2015 WL 1258218, at * 15 (E.D.N.Y. March 18, 2015); Allstate Ins. Co. v. Etienne, 2010 WL 4338333, at * 10 (E.D.N.Y. 26 Oct. 2010); Gov’t Emps. Ins. Co. v. Jacobson (E.D. N.Y. 2021)]

The term "material" means to have a natural tendency to influence, or be able to influence, the payment or receipt of money or property. [ Kungys v. USA 485 U.S.C. 759, 770, 108 S.Ct. 1537, 99 L.Ed.2d 839 (1988)] This materiality requirement derives from common law precedents. The usual law would not have been able to imagine "fraud" without proof of materiality. [ Neder v. USA 527 U.S. Pat. 1, 22, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999); Universal Health Servs., Inc. v. U.S. Pat. & Mass. ex rel. Escobar 136 S.Ct. 1989, 195 L.Ed.2d 348 (2016).]

Before an insurer decides to refuse a claim, it must have carried out a thorough investigation which establishes, in addition to a predominant part of all available evidence, that the claim is a which are not covered by the insurance. In addition, if the claim contains evidence of fraud, it is important that there is strong evidence sufficient to require the insurer to report to the state on suspicion of fraud attempting or having succeeded.


© 2021 – Barry Zalma [19659005] Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance misconduct, and insurance fraud almost equally for insurers and policyholders.

He also acts as an arbitrator or media

for insurance-related disputes. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry.

Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

He is available at http://www.zalma.com and zalma@zalma.com. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award. For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claimants to become professionals in insurance claims.

Go to training available at https://claimschool.com; articles at https://zalma.substack.com, the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr Zalma on Twitter at https://twitter.com/bzalma ; Go to Barry Zalma videos at https://www.rumble.com/zalma; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ T the last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud- letter -2 / podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4


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