Claim Denied Due To Misrepresentation

The reason someone is going to visit with an insurance lawyer is because a claim the person has made is being denied by their insurance company.  One of the most common reasons for denial of insurance policy benefits in life insurance situations is that there has been a misrepresentation in the life insurance policy application.

So what is the law in Texas as it relates to misrepresentations in life insurance policies?

The Texas Insurance Code, Section 705.004 reads as follows:

Sec. 705.004. POLICY PROVISION: MISREPRESENTATION IN POLICY APPLICATION. (a) An insurance policy provision that states that false statements made in the application for the policy or in the policy make the policy void or voidable:

(1) has no effect; and

(2) is not a defense in a suit brought on the policy.

(b) Subsection (a) does not apply if it is shown at trial that the matter misrepresented:

(1) was material to the risk; or

(2) contributed to the contingency or event on which the policy became due and payable.

(c) It is a question of fact whether a misrepresentation made in the application for the policy or in the policy itself was material to the risk or contributed to the contingency or event on which the policy became due and payable.

So, this is a good start to for fighting with the life insurance company about whether they are going to pay the policy benefits, or not.  But that is not the end of the argument.  The insurance company must also show more.

To be successful in a misrepresentation defense the insurance company must also prove the following:

  1.  the making of the misrepresentation;
  2.  the falsity of the representation;
  3.  the intent to deceive on the part of the insured in making the misrepresentation;
  4.  the materiality of the misrepresentation; and
  5.  the reliance on the misrepresentation by the insurance company.

The above is required whether the case is in United States Federal Court or in State or County Court.  Each of the above elements must be satisfied or the insurance company cannot cancel or rescind the policy due to the alleged misrepresentation.  The key part of this is that any alleged misrepresentation in the life insurance policy application has to be shown to have been made with the specific intent to deceive the insurance company.  Otherwise, the policy is enforced.