Defenses to Life Insurance Denials Based on a Material Misrepresentation – New Jersey

Eric Dinnocenzo is a New Jersey life insurance denial lawyer with experience challenging material misrepresentation claims. In New Jersey, beneficiaries have several common defenses to present when a life insurance claim is denied due to alleged material misrepresentation.

The Misrepresentation Was Not “Material”

Not every omission or misstatement on a life insurance application is deemed “material.” The insurer must demonstrate that the misrepresentation or omission would have significantly influenced its risk assessment, potentially leading to a denial of coverage or a higher premium. Not all details requested in the application meet this criterion; some may be trivial and have no bearing on mortality risk or the coverage amount.

Request Underwriting Guidelines and Documentation

During litigation, a life insurance company is obligated to provide documentation of its underwriting practices. It cannot solely rely on general assertions to deny coverage. Life insurance companies maintain detailed underwriting guidelines that classify various medical conditions and financial information. A lawyer specializing in New Jersey life insurance should request this information during a lawsuit to confirm the legitimacy of the claim denial.

Objective vs. Subjective Questions

New Jersey law differentiates between material misrepresentations in response to objective and subjective questions. Objective questions seek specific, verifiable facts—like whether the insured has consulted a doctor in the last five years—while subjective questions tend to explore an insured’s mental state—for instance, a question about whether they have experienced memory loss. Courts typically scrutinize misrepresentations related to objective questions more rigorously than those related to subjective inquiries.

Overlooked Facts or Conditions

It’s crucial to investigate whether the insurance company overlooked or minimized other health risks or personal information that they knew about during the application process. If the insurer dismissed certain known facts as minor when issuing the policy, it raises questions about the reliability of their current claims denial and whether the supposedly undisclosed facts are really that significant.

Simply put, the life insurance company should not benefit from a double standard. For example, if a life insurance company knew the insured had high blood pressure when it issued the policy, yet did not correctly apply the underwriting guidelines to it, it should not be able to argue after the insured dies that a similar condition it lacked knowledge of would have influenced its underwriting of the policy.

Waiver and Estoppel

In some cases, the insurer may have had enough information at the time of policy issuance to be aware of a medical condition that it later claims was not disclosed. For example, abnormal test results could indicate a specific medical issue. In such instances, a life insurance attorney might successfully argue a waiver or estoppel defense, as the insurer chose not to address the significant information.

Innocent Misrepresentation

While New Jersey law typically does not require proof of intent for misrepresentations on policy applications, there are circumstances where a lack of intent can be argued. This could include scenarios where the agent made an error, the insured had a disability, faced language barriers, or was unaware of a condition’s significance.

For further insights, you can read Eric Dinnocenzo’s articles The Postclaims Underwriting ‘Gotcha’ and “Life Insurance Denials Based on Material Misrepresentations: The Application Process, the Law, and Public Policy Collide.”

To discuss the validity of your life insurance denial claim for material misrepresentation, please contact New Jersey Life Insurance Attorney Eric Dinnocenzo at (212) 933-1675.