Filed Under:Agent Broker, Coverage Issues

Can a carrier decline coverage due to incorrect information on an application?

Coverage Q&A

Accuracy on an insurance application matters when it comes to determining if an event is covered. (Photo: Shutterstock)
Accuracy on an insurance application matters when it comes to determining if an event is covered. (Photo: Shutterstock)

I had a question in regards to insurance coverage and signed applications. Can a carrier decline coverage due to incorrect information on a company application that was signed by the insured? How much weight does an application carry?

-California Subscriber

Yes, a company can decline coverage and void the policy for incorrect information. Most applications state this just above the signature, that if the insured materially misrepresented a piece of information that the carrier relied on to grant coverage and the carrier discovers it at the time of loss or after the policy is bound, they can void the policy.

Material misrepresentation is the failure to disclose a fact that would change the carrier’s mind about issuing a policy. For example, the insured fails to mention that he has a mean Rottweiler with a history of biting people unprovoked. Most carriers would deny an application if they knew that risk existed on a homeowners' policy.

The application carries a fair bit of weight; it is the information presented to the carrier in order for the carrier to determine if the risk is eligible for coverage. Incorrect or omitted information can drastically affect a carrier’s acceptance or rejection of the risk.  

Analysis brought to you by the experts at FC&S Online, the unquestioned authority on insurance coverage interpretation and analysis for the P&C industry. To find out more—or to have YOUR coverage question answered—visit www.nationalunderwriter.com/FCS

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