How the duty works in US insurance
Some legal systems impose a broad duty on the applicant to volunteer everything an insurer might consider important. In most US states the focus is narrower: whether the applicant answered the insurer's questions truthfully, and whether any false answer was material. In New York, materiality generally asks whether the insurer would have declined to issue that policy had it known the truth. States differ on whether the applicant's intent matters, and in New York a misrepresentation can justify rescission even without intent to deceive if it was material. Marine insurance has traditionally carried a stronger duty to disclose, and commercial policies sometimes contain warranties that work differently from ordinary application questions.
Rescission and claim denials
When an insurer believes the application contained a material misrepresentation, it may try to rescind the policy, treating it as though it never existed and usually returning the premiums. That is different from denying a single claim under a policy exclusion. For life insurance and some health coverage, contestability provisions limit how long the insurer can challenge the application, though the treatment of fraud varies by state. The insurer usually has to prove the misrepresentation and its materiality, often through its underwriting guidelines and testimony from its underwriters. Questions the insurer raises for the first time after a claim are a separate matter from the answers given on the application.
Getting ready to respond
Obtain a copy of the full application as signed, including any electronic forms and recorded phone interviews, along with the policy and every letter from the insurer. If an agent or broker filled in the answer at issue, be ready to tell your lawyer who completed it and what you told them at the time. Medical or financial records the insurer relies on should be checked for accuracy. We compare the question actually asked with the answer given, look at whether the insurer's own underwriting rules support its claim of materiality, and check the policy for appeal and lawsuit deadlines. Then we discuss whether to respond through the insurer's internal process, a complaint to the state insurance regulator, or litigation.
