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Posts|December 06, 2022

What Do You Mean My Coverage is Void? The Importance of Accurately Filling Out Your Insurance Applications

By Jeff Cavignac
President CPCU, RPLU, ARM

Most lines of business insurance require the prospective insured to complete and sign an application. These “apps” can be time consuming to complete, detailed and lengthy.  Insurance Underwriters determine whether or not they will quote a risk and what terms they will offer based on the applications they receive.

What most insured’s don’t realize is that when they sign the application, they are warranting that the information is:

TO THE BEST OF HIS/HER KNOWLEDGE AND BELIEF, AFTER REASONABLE INQUIRY, THE STATEMENTS SET FORTH IN THE ATTACHED APPLICATION FOR INSURANCE ARE TRUE AND COMPLETE AND MAY BE RELIED UPON BY THE UNDERWRITER. IF THE INFORMATION IN ANY APPLICATION CHANGES PRIOR TO THE INCEPTION DATE OF THE POLICY, THE APPLICANT WILL NOTIFY THE COMPANY OF SUCH CHANGES, AND THE COMPANY MAY MODIFY OR WITHDRAW ANY OUTSTANDING QUOTATION.  IT IS AGREED THAT THIS APPLICATION, INCLUDING ANY MATERIAL SUBMITTED THEREWITH, SHALL BE THE BASIS OF THE INSURANCE AND SHALL BE CONSIDERED PHYSICALLY ATTACHED TO AND PART OF THE POLICY, IF ISSUED. THE COMPANY WILL HAVE RELIED UPON THIS APPLICATION, INCLUDING ANY MATERIAL SUBMITTED THEREWITH, IN ISSUING THE POLICY.

If at the time of a claim, the insurance company reviews the application and determines there were relevant misrepresentations, they can void the coverage. It should also pointed out, that in most states any person who knowingly and with intent to injure, defraud, or deceive any insurer and who files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony.

Insurance is critical to the success of every business.  It is critical that the coverage you purchased, be there when you need it.  The importance of accurately completing your insurance applications cannot be overemphasized.

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