Insurance applications are the first forms you’ll see when buying insurance. But if you’re not careful, that application could get your claim denied.
One of the first things that a claims adjuster will do when he receives your claim is ask the Underwriting Department to send him a copy of your application. Why? Because part of his investigation of your claim is to verify the information found on your application. Lots of times, adjusters find incorrect information on applications that allow the insurance company to deny the claim and even void the policy like it never occurred.
Let me give you a couple examples of denial that actually happened:
Example #1. A man bought car insurance in 2002. At the time their application was accepted, the only drivers were himself and his wife. They had a 10 year old daughter. In 2008, they had an automobile accident. The daughter is now 16 but does not drive. After the adjuster did his investigation, they received a letter from the insurance company that denied their claim. The letter said that the insured had failed to disclose a potential driver in the household. Even though they disclosed their daughters name and age in 2002, and the policy had renewed six times, the insurance company used a misinterpretation of policy language to deny a claim.
Example #2. A man applies for car insurance while married but separated. The application asks marital status, married or single. The man checks the box for “married.” He lists both himself and his wife as drivers. A few months later, he has an at-fault car wreck. His car is a total loss, he is being sued for negligence, and has medical bills of $5,000. The investigation finds that he was separated at the time of the acceptance of the application. The insurance company sends him a check for $525, which is his returned premium, and denies the claim, stating that the company would not have given the policyholder the “marriage discount” had they known he was separated.
So, how can you protect yourself from application errors? Here are six ways.
1. Fill out the application completely. Do not leave any boxes or lines blank
2. Do not sign the application until all of the information is completed.
3. Do not sign an application and allow the agent to complete it after you leave.
4. Once you sign the application, have the agent make you a copy of the application right then.
5. Once you receive your new policy, compare the information on your application with the terms and conditions of the policy.
6. Report changes in your policy promptly to your agent, like added drivers, deleted cars, or address changes.
If you will be very careful to do these six things, you can be confident that you will not have problems with your insurance company at claims time over your application.