Insurance Company Opportunism May Cost You Big Time

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jun 19, 2018

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You will want to consult an attorney if this fact situation sounds familiar. You purchase a life insurance policy in connection with the purchase of a vehicle. The insurance company application requires only a general statement of good health. The statement, in its entirety, consists of the following: “I am now in good health, mentally and physically; I know of no physical impairment or disease now affecting my health.” If you agree with that statement, which is your opinion, you simply have to check the box next to it and sign your name below it. That is the only “inquiry” into your health history on the application. No details are requested concerning your health history. So you check the box and sign the form.

You have a history of asthma. You are not, however, impaired by this condition. Aside from periodic visits to a doctor for prescription refills, you have not sought treatment for your asthma for more than 4 years. Based on these facts, it is not unreasonable for you to believe you are in good health, without any physical impairment or disease currently affecting your health. You were not asked if you had any specific health conditions, nor were you asked to list any conditions you may have. In fact, you weren’t asked any questions. You were simply presented a statement of medical opinion and asked to sign if you thought it accurately applied to you. In your opinion it did, so you signed it.

You subsequently die as a result of a fatal asthmatic reaction to a drug prescribed by your dentist during root canal treatments. Your widow files a claim with the insurance company seeking the death benefit. After the claim is filed, the insurance company initiates an underwriting investigation. When the company discovers that you had asthma, the claim is denied on the grounds that the statement to which you certified on the application was a misrepresentation. The insurance company claims that if you had indicated on the application that you suffered from asthma, it would not have issued the policy. Therefore, it cancels the policy and does not pay the death benefit to your widow.

Your widow sues the insurance company. At trial, testimony of the insurance company underwriter shows that the company had no written underwriting policy relating to asthma and that the underwriter knew of no applications for insurance rejected by the insurance company because the applicant had asthma. Therefore, there is no credible evidence to support a conclusion that the insurance company would have refused to issue the policy if it had known of your asthma condition.

The record creates a picture of an insurance company that deliberately engaged in post claim underwriting for the sole purpose of avoiding the payment of your widow’s claim, and other similar claims, and sets this up by using an application that asks for your opinion of your health instead of asking for facts about your health and physical condition. In essence, it is asking you to do the jobs of both physician and underwriter – jobs which you are not qualified to do.

If you or a relative find yourself in a situation that sounds similar to this, you should contact an attorney immediately.

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