Insurance companies often deny claims and/or attempt to rescind insurance policies (treat them as though they never existed) when they believe the insured made a misrepresentation at a critical point. Misrepresentation accusations are often raised after a claim is made, and targeted towards statements made on the initial insurance application or in the claims investigation process. It is important to consult an attorney if this issue arises.
Several questions must be asked when the insurance company claims there was a misrepresentation on an application because that alone might not justify denying the claim or rescinding coverage. For example, was the misrepresentation intentional or accidental? The effect can be different in different kinds of claims. Was it made by the insured, their broker, or an agent acting on behalf of the company? That can affect whether the insured can be held accountable for it, or if so, whether the insured has a legal action against the broker. What else did the insurance company know when it received the application? If the insurance company failed to investigate information that would indicate the statement was false, it may not be able to rely on it to deny the claim. Would the truth have changed the decision to insure? If not, then the insurer may still have to pay. These are just some of the many important questions that need to be investigated when this issue arises.