| "Clean" Applications Important |
The Division of Insurance continues to get complaints from consumers about post-claim underwriting on individual policies. Carriers are exercising their right to rescind policies for material misrepresentation or omissions on an application. Some state laws allow a carrier to void an individual policy due to material misrepresentation on the application within the first 2 years of coverage.
To avoid the possibility of having coverage rescinded, applicants should answer all questions on the application accurately and completely. Producers should not "coach" applicants to omit or modify responses as such actions would constitute a violation of statutes and regulations related to agent actions. The Division will investigate allegations of agent misrepresentation with respect to insurance applications.
People should be able to depend on their insurance coverage once it is issued; but in order to have that "peace of mind," the application must be "clean" - with all questions answered honestly and completely. Otherwise, when someone files a claim within the contestability period, they may find that they have no insurance when they need it most.
Source: the Colorado Regulator
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