The act of making, issuing, circulating, or causing to be issued or circulated any written or verbal statement that does not accurately represent the correct policy terms.
More Examples of Misrepresentation:
The material misrepresentation may occur in the original application for the insurance or in an amendment to the application or in an application for reinstatement for Individual or Group Life cases, or in an application for late enrollment in a Group case.
A material misrepresentation sufficient to deny a claim can not be just any misstatement. (For example, if you said you had green eyes but the company would say they are hazel, that would NOT be material.) Under many states' laws, a material misstatement is one that if fully and truthfully disclosed would have led to a refusal by the insurer to issue the policy, at least on the terms and conditions it issued the policy.
While a material misrepresentation can be made about almost anything the application seeks to uncover, such as the applicant's occupation, employment history, age, income, other insurance in force, prior applications for insurance, insurance claims made, cigarette smoking or tobacco usage (and other slow suicide attempts), driving record or tickets, drinking, hobbies, piloting or flying in non-commercial aircraft, etc, the most commonly charged misrepresentations involve an applicant's state of health and medical history
There has been controversy over how to measure damages in negligent misrepresentation cases. In D.S.A., Inc. v. Hillsboro Independent School District (1998), the Texas Supreme Court said that the measure of actual damages is not what lawyers call benefit-of-the-bargain damages but out-of-pocket (reliance) damages.
Out-of-pocket damages are the difference between the value of what the buyer paid and the value of what he received. Benefit-of-the-bargain damages are the difference between the represented value of the thing or service purchased and the value actually received. Out-of-pocket damages are usually measured at the time of sale.
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