How to Avoid the Insurance Application Misrepresentation Trap

application.jpgSadly, the first thought that crosses the mind of many insurance adjusters when a claim is made is how it can be denied. At the top of the list of the ways to deny claims is rescinding the insurance contract.

Black’s Law Dictionary defines rescission as an act “where a contract is canceled, annulled, or abrogated.” An insurance policy can be rescinded before or after a claim is made. Insurance companies prefer to wait until after a claim is made. The longer they wait, the more money they receive in premium payments. If no claim is made, the carrier keeps all the premiums and pays out nothing. If a claim is made, the carrier rescinds and refunds only those insurance premiums paid to keep the policy in effect after the rescission. Heads we win, tails you lose.

Thanks to favorable legislation and case law, it is surprisingly easy for insurance companies doing business in Florida to rescind policies. Among the more popular excuses is misrepresentation. Florida Statute 627.409 (2010) allows rescission on this basis if the carrier can show the following:

a) The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer.

(b) If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss.


Casamassina v. US Life Ins. Co., 958 So. 2d 1093 (4th DCA 2007), provides a tiny glimmer of hope for insureds. Because of language in the insurance application, U.S. Life was prevented from using Section 627.409 to rescind the policy.

United States Life Insurance Company issued a $500,000 life insurance policy to John Casamassina on November 6, 1997. Less than two weeks later, Casamassina was diagnosed with a brain tumor; he died on December 4, 1997. After U.S. Life denied the policy claim, the trust beneficiary of the policy and the widow filed suit.

U.S. Life denied coverage because of perceived differences between information contained in the insurance application and events just prior to its completion. Although Casamassina had sought medical advice from various doctors for severe headaches, dizziness, congestion, loss of balance, nausea or vomiting, and pressure in the head, he failed to acknowledge these symptoms in the application when questioned about medical conditions.

Casamassina signed the application with this declaration:

I hereby declare that, to the best of my knowledge and belief, the information given above is correctly recorded, complete, and true, and I agree that the Company [US Life], believing it to be true, shall rely and act upon it accordingly.

(Emphasis added).

Relying on the statute, the trial court granted summary judgment for the insurer. The ruling was appealed. In reversing the trial judge’s ruling, the 4th DCA held that the “less stringent” “knowledge and belief” standard contained in the insurance application controls over the strict standard set forth in section 627.409(1). In the court’s view, “an omission or misrepresentation in an insurance application, when the application is completed to the best of the applicant’s knowledge and belief, is not a basis for rescission of a policy.”

The case was remanded to the circuit court with directions that it was a jury question whether the application was completed by Casamassina to the best of his knowledge and belief.

The lesson from this blog is to be extremely careful and honest in completing insurance applications. However, even honest mistakes can be grounds for the policy being rescinded. It may help to use the Casamassina language. Hand write it in if necessary.

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Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals – the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.