Material Misrepresentations – New York

Material misrepresentations in life insurance applications are one of the most common grounds for life insurance denials in New York. The Law Offices of Eric Dinnocenzo are New York life insurance lawyers with experience fighting against material misrepresentation claims.

What is a material misrepresentation?

Essentially, a material misrepresentation occurs when an insured makes a false or incorrect statement in a life insurance application. Material misrepresentations are commonly alleged to have occurred with respect to the following:

• Medical history and current health
• Assets and income
• Other life insurance policies in existence
• Alcohol or tobacco use
• Dangerous hobbies and activities

New York law allows a life insurance company to deny a death benefit claim if a material misrepresentation was made in the application, and even if it was innocently made and has no relation to the cause of death.

The New York two-year contestability period

For life insurance policies subject to New York law, the insured must pass away within two years of the date the policy was issued for a denial to be made based on a material misrepresentation. If, however, the policy has been in effect for over two years on the date the insured dies, the insurance company cannot deny the claim based on a material misrepresentation. This rule is set forth in New York Insurance Law § 3203.

The rationale behind the two-year cut off period, known as the contestability period, is to prevent life insurance denials from being made years after a policy is issued, when the insured has passed away and beneficiaries, who may depend on the life insurance benefit for their financial support, would have a difficult time asserting a defense.

Postclaim Underwriting

When the insured dies within the two-year contestability period, the insurance company will routinely request an insured’s medical or financial records and then closely compare them with the application to determine if there are discrepancies. If one or more are found, there is a high risk that there will be a life insurance denial based on material misrepresentation.

While life insurance companies frequently do not request medical and financial records from applicants before issuing a policy, they almost always do so when the insured dies within the contestability period. This practice, which has been heavily critiqued by consumer and policyholder advocates, is referred to as “post claim underwriting.”

Click here to read an article by New York Life Insurance Attorney Eric Dinnocenzo on this topic.

This practice unfairly results in a lax underwriting of the life insurance policy followed by a strict analysis of the contents of the policy application only after a claim is made and loved ones are in a vulnerable position. This can be especially unfair because, while some insureds do make false statements on the application, many are misled by the insurance broker or agent to minimize health conditions in the application in order to make a more competitive sale, or they do not fully understand or recall the information asked for in the application.

How can I defeat a denial for a life insurance material misrepresentation in New York?

There are ways to defeat the material misrepresentation defense if you have a life insurance policy governed by New York law.

The misrepresentation may not actually be “material” in that, if known, the insurance company would still have issued the policy, or would not have assigned a different rating. In addition, there may be a waiver or estoppel argument that the insurance company had notice of the undisclosed medical condition.

You can see more information about defenses to material misrepresentations in New York life insurance policies on our webpage Defenses to Life Insurance Denials Based on Material Misrepresentation – New York.

If you have suffered a life insurance denial based on a material misrepresentation, you can contact New York life insurance lawyer Eric Dinnocenzo at (212) 933-1675 for a free consultation.