Incorrect presentation in an insurance application may give grounds for an insurance company to refuse an otherwise valid claim after a loss. In such circumstances, the insurance company claims that the insurance policy was invalid from the outset based on incorrect presentation because it would not have issued the insurance or would not have issued it on the same terms if the representation had not been made.  Since the discovery of an incorrect presentation in an insurance application enables insurance companies to avoid paying claims, insurance companies may unfairly claim that insured persons have made incorrect information about their insurance application after a loss.
a federal appeals court argued that an insured knowingly misrepresented a material fact in his insurance application when he did not disclose his wife's bankruptcy and that the misrepresentation justified the insurance recession. In that case, when the insured applied for insurance for a rental property he bought in Louisiana in 201
After the insured signed and submitted the insurance application, the insurance company issued the insurance. A month later, the house burned down. When the insured filed a claim for damages, the insurance company requested that the insured and his wife be subjected to an examination under oath ("EUO") in accordance with the policy. At the insured's EUO, the insured stated that he knew that his wife actively paid debts under a bankruptcy agreement with the creditors until 2015. At the insured's wife's EUO, she testified that her husband knew about her bankruptcy and further stated that her husband's answer to the bankruptcy question was incorrectly.
The insurance company denied the claim for the fire due to the insured's incorrect presentation of its wife's bankruptcy status and disputes began to determine whether the insurance was properly terminated for incorrect reasons. The Board of Appeal found that the insurance company's cancellation of the insurance under Louisiana law was correct because the insured had made a false statement about his wife's bankruptcy status. that the false claim was material; and that it was done with intent to deceive. The court found that there was no real dispute that the insured deliberately misrepresented the existence of his wife's bankruptcy status to the insurance company based on EUO testimony. The court also found that the incorrect presentation was material because the insurance company submitted a declaration that it would have refused the insured's application if he had answered "yes" to the bankruptcy question.
If your insurance claim was denied based on a misrepresentation in your insurance application, contact your local Merlin Law Group attorney to see if there are grounds to combat the denial based on your state's law.
1 Geovera Specialty Ins. Co. v. Odoms 2020 WL 6532087 (5th Circ. 5 November 2020).