Insurer refusing to process my son's claim because we own the title

[ICACharleston]

On the health and life side, insurers would rescind a policy that was fraudulently taken out and return premium. Would the same apply here? Would the insurer have paid a liability claim?

just asking, no dog in this fight.

 

[Markthebroker]

Let's reverse the scenario. You own the car and the check is made out to your son and he spends it on new Nike sneakers. You are out a car, he is out of a ride, and you would be complaining that your son didn't own the car.

Oh man, that's a good one.

 

[Tahoe Ray]

You own the car and the check is made out to your son and he spends it on new Nike sneakers. You are out a car, he is out of a ride, and you would be complaining that your son didn't own the car.

But now he can run to wherever he has to go and do so looking good.

 

[adjusterjack]

On the health and life side, insurers would rescind a policy that was fraudulently taken out and return premium. Would the same apply here? Would the insurer have paid a liability claim?

It's a good question. In the life and health business the insurance company's right to deny and rescind is limited by the two year contestability period.

In the property/casualty business there is no such limit. The representations made on the application are permanent but they would have to be material to the underwriting of the risk to allow the insurance company to deny a claim and rescind the policy. This is a serious decision and P/C companies don't make it likely. There is a comprehensive body of case law that addresses materiality. A representation is material if 1 - the risk would have been declined, or 2 - a higher premium would have been charged, or 3 - coverage would have been reduced.

In this case the ownership issue is not a material misrepresentation (and certainly not fraud) because it is likely that the insurance underwriter would have accepted the risk at the quoted premium and coverage had the title issue been known and corrected at the time of application which is why the insurance company is requiring that it be titled in the name of the insured now, instead of denying the claim.

That this happens to be inconvenient to the father during bankruptcy is unfortunate but, as has been suggested, there may be a solution. If not, they are just going to have to wait until the title can be transferred to get the claim paid.

 

[marindependent]

That this happens to be inconvenient to the father during bankruptcy is unfortunate but, as has been suggested, there may be a solution. If not, they are just going to have to wait until the title can be transferred to get the claim paid.

Well Said