When would a misrepresentation on the insurance application be considered fraud?

Answer 1

Misrepresentation in insurance mainly occurs during filling up of proposal form whether by the proposer or by the agent. There is a tendency among many proposers to conceal pre existing diseases which becomes fatal when any eventuality occurs. Suppose, in medical insurance, a person of 40 years did not

mention that he is a diabetic. The same person had a heart attack and from the prescription of the doctor it was amply proved that he was a diabetic. Now the Insurance Co. has every right to deny the claim on the ground that the person concealed his pre existing disease while filling up the proposal form for medical insurance. Similarly, an alcoholic took a life insurance and did not mention in the proposal form about his Alcoholism. Now, the said person died in a road accident while driving and it was proved from the viscera report that he was under the state of intoxication. Where as the nominee was supposed to get double the sum insured as double accident benefit, the insurance company may not allow a single dollar for a silly mistake as many people are not aware that a simple declaration about taking alcohol one peg a day would have saved the day. Though I will not vouch for mis declaration as sincerity and honesty pay in the long run.

I will further cite two examples which will reveal how misrepresentation in insurance emptied their exchequer. In India, jute barons used to put huge jute wastes on fire and claimed before Insurance Company under their Fire Policy showing huge loss, in connivance with surveyors and forced the Insurance Co. to honor their claims,knowing full well that they were entirely fictitious. Before implementation of cash less scheme, many unscrupulous people used to get themselves admitted to Nursing Home under individual insurance policy,stayed for 24 hours with no disease/illness at all,submitted their reimbursement claims before Insurance company that too, in connivance with nursing home officials. The insurance cos were reluctantly to admit their claims, knowing them to be superfluous.

Answer 2

If iti is intentional and material