Life Insurance – Misrepresentation In The Application

Grand Prairie life insurance lawyers know that for a life insurance company to establish misrepresentation as a defense for refusing to pay on a claim, that the life insurance company must plead and prove five elements:

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

The requirement of these elements is made clear in Union Bankers Ins. Co. v. Shelton, a 1994 Texas Supreme Court opinion, and the 1980 opinion, Mayes v. Massachusetts Mut. Life Ins. Co.  This is codified in the Texas Insurance Code, Section 705.001 to 705.004, and 705.101 to 705.105.

Another requirement helpful to claimants is that a 1991, 14th District opinion, Flowers v. United Ins. Co. of Am., says, mere knowledge of one’s health condition is insufficient to prove intent to deceive as a matter of law.

In the 1993, San Antonio Court of Appeals opinion, Garcia v. John Hancock Variable Life Ins. Co. the insurer asked the court to determine that “intent to deceive” was proven as a matter of law where the alleged misrepresentation was the decedent’s failure to disclose that he had been treated for diabetes.  He had visited the doctor on February 18th and filled out his first application on February 25th.  He was taking prescription medicine for diabetes when he executed a second application on March 10th.  The court did not agree that this sequence of events proved intent to deceive as a matter of law based upon the number, frequency, and proximity of the alleged misrepresentations to the medical treatment.

In a 1989, El Paso Court of Appeals opinion styled, Southwestern Life Ins. Co. v. Green, Green applied for insurance.  A few months later he was hospitalized with a diagnosis of chronic alcoholism, alcoholic hepatitis, and early cirrhosis.  He died the next year from liver failure.  The insurer argued this evidence established his intent to deceive, as a matter of law.  The court rejected this argument, in part, based on testimony from a counselor that an alcoholic is often in denial about his alcoholism and may deny excessive alcohol use and other physical problems, without intending to deceive anyone.