What is New York and New Jersey law for material misrepresentations?
A surprising and unfair aspect about New Jersey and New York life insurance law to many consumers is that a material misrepresentation does not have to relate to the cause of death. In other words, a material misrepresentation can be shown if the omission or misrepresentation would have caused the insurance company to either (1) decline to issue a policy; or (2) issue a policy at a higher premium rate.
Here is a simple example: assume that an insured dies in a car accident. If a misrepresentation was made by failing to disclose that the insured had cancer, this would probably be a valid reason to deny coverage, even though it had no relationship to the cause of death.
But the omission or misrepresentation must be material for there to be rescission of coverage. So, if the insured misrepresented his hair color (assuming the question was asked, which it probably would not be), it would not be deemed "material," but to use the previous example, failing to disclose cancer likely would be.
In short, the failure to disclose a fact that is insignificant to the assessment of risk and issuance of the policy should not be deemed a material misrepresentation. Thus, not all omissions or misrepresentations are considered to be material.
Are there defenses to material misrepresentations?
Sure, there are. You should never rely on the decision of the life insurance company as the final word on whether or not the policy should be paid. A life insurance policy is a contract, and like with any contract, a party to it can sue the other contracting party when there is a breach.
A skilled life insurance attorney with a knowledge of New Jersey and New York law can evaluate the application, policy, and underwriting guidelines to determine if a material misrepresentation was made or if the policy should rightfully be paid.
Please contact New Jersey and New York Life Insurance Attorney Eric Dinnocenzo at (212) 933-1675 to discuss if you have a valid life insurance denial claim.