Precision Auto Accessories submitted an application to Utica requesting coverage. Utica issued the policy based on the information provided.

A fire totally destroyed Precision's business. Utica responded and investigated, intending to pay the claim. However, its investigation revealed that Precision lied about its prior loss history. Utica denied the claim and rescinded the policy based on that misrepresentation.

Precision sued Utica, never denying that it lied. It argued that Utica could have discovered the truth if it had tried. It also argued that Utica discovered the lie but took no action. In addition, it took the position that Utica took too long to deny the claim.

This case made it all the way to the New York Supreme Court but coverage was still denied.

Click here for more details on this court case.

Misrepresentations are lies told to obtain insurance coverage. Some are minor. Others, such as prior loss history, are major. Any misrepresentation potentially voids coverage.

Insurance policies have a condition that allows the company to void coverage when a material fact is misrepresented. It is important that every client understands that telling “white lies” may result in a better price, but may also result in a denial of coverage when it is needed most.

Click here to review the PF&M analysis of Insurance Services Office (ISO) Commercial Property Conditions.

Misrepresentation may take place at the time the application is prepared or at the time of loss. Intentional misrepresentations are considered fraud. Fraud is a major issue that insurance companies work together to fight because it drives up everyone's insurance costs.

The following emarketing article may be useful to inform your customers of how they can help prevent fraud and to let them know how seriously the insurance industry takes it.

Click here to review the emarketing article on insurance fraud.

Intentional fraud may appear to be a victimless crime but it costs millions and the insurance industry takes it very seriously. In addition to denying coverage, it also works with law enforcement to prosecute the perpetrators.

Click here for a Rough Notes Magazine article about the National Insurance Crime Bureau and its efforts to curb insurance fraud.

The 2010 Insurance Marketplace updates are in. Check out the new Benefits section. Some of the new coverage listings are:

Ferry Flight Insurance
Equity Protection Plan
COBRA Consulting
Short-Term Disability
Worksite Management
Business Travel Accident
Pharmacy Benefit Management
Wellness Services

Have you found what you need in the Producer OnLine? Is there a classification
to add to the Producer's Commercial Lines Risk Evaluation System or a subject that you would like to see covered in PF&M?  Contact us now.

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