Life Insurance – Other Requirements For Misrepresentation Defense

Arlington life insurance lawyers know the requirements insurance companies must meet to successfully defend a life insurance case based on the defense of misrepresentation.  Misrepresentation in the policy application is the most common reason for denial of a claim for benefits.

The Texas Insurance Code, Sections 705.001 to 705.005, prohibits a defense to coverage based on misrepresentations in an application, unless the application is attached to the policy.  The statute is affirmed in the 1994, Texas Supreme Court opinion, Fredonia State Bank v. General American Life Insurance Co.

As was stated in another Texas Supreme Court opinion in 1975 styled, Johnson v. Prudential Insurance Co. of America, “Applications for insurance and other written statements made in that connection are often filled out or written by insurance agents or others and only signed by the insured.  It has often been held that it is the underlying legislative intention to require that the insured have the material terms of the contract at hand during his lifetime in order that he might examine and correct any misrepresentations which have been made the basis of the insurance coverage.”

Furthermore, an insurance company must give notice that it intends to deny coverage, based on the insurer’s discovery of a misrepresentation by the insured.  This was made clear in Prudential Insurance Co. of America v. Torres.

According to the 1990, Texas Supreme Court opinion, Koral Indus. v. Security — Connecticut Life Insurance Co., an insurer’s actual knowledge of the misrepresentations will defeat its defense, but evidence that the insurer should have known the truth is not sufficient.