Have you ever wondered what is the legal significance of a material representation in an insurance application? Well, it is the complete list of all important information that insurance companies can consider relevant in taking the next course of action involving your insurance.
Transactions with insurance companies require a physically signed contract that states clauses, terms, and conditions for the benefit of both the insurer and the company. This will also include benefits, hard limits, and special situations that are specific to the customer.
Before applying for insurance, you are required to discuss all your assets and all related data that may increase or decrease the value of your policy. This allows the company to determine the amount your insured asset deserves.
Legal Significance Of A Material Representation In An Insurance Application
Before the two parties agree, there are certain characteristics that each has to look for one. For the insurer, they want to receive the best premiums at the lowest cost. For the company, they want to make sure the client deserves what they’re given. Material representation comes in. The insurer is obligated to submit a list of assets and specified information about it—for example, a house. A material representation document should state if the house has once burned down or has creaking ceilings.
This data will then prompt the company to calculate the cost of your house about its features. Given the information, they can choose to deduct this from the value or increase your balance. Going back, what is the legal significance of a material representation in an insurance application?
Since all of this data will be placed in a written contract, signed by two parties, it will be concrete evidence in court. In case of the policy failing to provide in times of need, you may use this as proof that they are legally obligated to do so.
However, at the same time, you can be sued for material misrepresentation. Wherein the company thinks you have purposely omitted negative features to increase your policy. If you are found guilty, you may be forced to give up your premium.
Material Misrepresentation
Material misrepresentations are when the insurer deliberately or unintentionally fails to submit an accurate description of their assets, leading to the insurance providers having a miscalculation over the true value of the assets. While a completely understandable course of action for companies to avoid losing money, you may use it for selfish reasons at times. They may create huge issues over minor details and use them against you to decrease your asset value.
For example, they may point out that your house lacks the convenience of an alarm system. They will be nitpicking all barely noticeable features and create exaggerated scenarios of how it can be risky and is, therefore, a demerit for your house.
This is a ruse to lower your insurance policy. If you feel like you are being gaslighted with this trick, it would be better to consult a lawyer. This way, you can understand your rights and fight for unnecessary contract changes. Plus, you can receive the best premium they can offer.
What To Do When Accused Of Material Misrepresentation?
Before consulting for insurance, it will be good to have fundamental knowledge about insurance in general. Understand the basic terms and familiarize yourself with rates, clauses, and hard limits of contracts. Insurance involves your hard-earned money, so making an effort is in your best interests.
Next is choosing your company, again have basic knowledge over how they handle their clients. Look for both positive and negative reviews. Deciding on an insurance company does not depend on the best offer. Choose a company that you can trust the most and find a great offer from there.
A good offer is only partial to having good insurance. The most vital component is a reliable insurance corporation that you can entrust to your future. Know if they are great at handling situations and have stable stock value before you apply for coverage.
Though not really necessary, it would be good to acquaint yourself with a lawyer. Give them firsthand knowledge of your policy and let them read over the contract in case of fishy terms. This way, you can remove the risks of getting tricked. Lawyers are also good at spotting hard limits, so if you have necessary concerns, inform them. They will change the necessary parts of the agreement for your benefit. If you already have a fiduciary, you may go over the terms with them.
If somewhere along the line you are accused of material misrepresentation, do not panic. This may be a calculated move by the company to save their money. Contact a lawyer as soon as possible and let them go over the signed agreement. It is important not to make decisions without a legal adviser since you may be forced to sign low-cost policies that will decrease your policy and fall into the money laundering scheme. Get a lawyer and get the next course of action from there.
If you feel like the claims are unnecessary and have not omitted facts that are obviously relevant to the asset, you are innocent. That is most likely just an attempt to get more money from you. Your lawyer will contest the claims in court. You may go for the argument that the company is making ridiculous expectations of the criteria needed for material representation. The jury may see your appeal if you highlight the absurdity of misrepresentation over a minor issue.
Conclusion
Now that you know what is the legal significance of a material representation in an insurance application make wise decisions. Never forget to take precautionary measures since you are handling your money. Good luck!