• Sunday, July 21, 2024
businessday logo


Do not hide facts from your insurer…it could mean much during claims

With rising inflation insurance should be upscaled for realist claims – Fola Daniel

Misrepresentation of facts or omissions of relevant information are grievous offences that could make you lose your insurance claim. Such facts may really not mean much for you, but it becomes heavy when your listed beneficiary is denied claim and at that time you will not be there.

It could as well be called concealment of vital facts. Concealment of vital facts from your insurer or broker while entering into the contract of insurance could be very dangerous at the end of the day.

Fine, you may be lucky to get cheaper premium because of the vital facts you have hidden, but note that you will be treading on a dangerous part should any claim arise.

Life insurance could be more problematic because if claims arise as a result of death of the insured’s long time ailment, which was not made known to the insurer at the time of the contract, then the claim may be repudiated. If the insurer finds that the illness is a result of a habit that is not declared, it may reject claim

According to experts, “if you submit incorrect information or hide key facts, you may get a low premium, but it could lead to rejection of claim.”

In most cases, a material misrepresentation concerns the applicant’s health or medical history. Other statements (or omissions) that may constitute a material misrepresentation deal with: Smoking and drinking habits; age; type of employment or employment history; hobbies; income as well as other insurance policies owned by the applicant.

Read also: How to make the most of your home insurance claim

Unfortunately, not many insureds like to open up on their health challenges. They prefer to keep their medical problems under wraps. For some, it’s tempting to conceal facts that are likely to push up their premium, or deny them an insurance cover altogether. For others, ignorance is bliss because they let their agents fill up the details.

Almost 22 percent of the respondents to an online survey conducted in India either not mention their illness or seek the agent’s help in concealing it to keep the premium low. Another 8 percent said they would not disclose the full extent of the problem, and water it down.

According to experts, withholding crucial information on the state of your health from your insurance company can have serious ramifications. “If an insurance company finds out that a policyholder has concealed information that affects the risk to his life, out goes the claim.”

Don’t expect a company to be lenient because the policyholder’s family is without support, the expert stated.

If the insurance company investigates the death of an insured person and finds that a material misrepresentation exists, they have the right to void the insurance policy. This is a contract dispute, not an indication of bad faith on the part of the insurer, experts say.

Jodee Redmond in KYP says that when a life insurance claim is denied, the insurance company may state that if all the facts about the insured were known at the time of the application, the policy would not have been issued. From the point of view of the insurer, even if the misstatement or the omission had nothing to do with the individual’s death, the claim will usually not be paid.`