Filing Insurance Applications in Florida

The question was recently posed in a discussion blog about when an insurer must file Applications with the Florida OIR.  Essentially asking, when does Section 627.410, Florida Statutes, require the Application to be filed.  This filing rule requires filing of an “…application form where written application is required and is to be made a part of the policy or contract….”  One colleague pointed out that the Application must be filed if it is physically attached to the policy, and that once this has been done the Application information can be the basis to “terminate a policy for misrepresentation.”  I expanded upon that answer as follows. 

 

Its not merely when the Application is physically attached as part of the policy that the Application needs to be filed.  It also applies when the Application is incorporated by reference.  While physical attachment of the Application to the policy is common in Life products (as the Life Application frequently includes language that becomes part of the policy), with respect to wheels (auto, motorcycles, motor homes, etc.) it is common to find a clause that incorporates the Application by reference so that the representations and warranties are part of the policy, and not, as some plaintiff attorneys have argued, merely an inducement to a policy that is separate from the policy to be read on the 4 corners of the policy contract. Once the representations and warranties are part of the contract by being incorporated by reference, a strong legal basis has been established (under most state’s laws) to rescind (void ab initio) the policy due to material misrepresentation in the Application if those representations or warranties are proven to be untrue or concealing the truth.  Once voided (notice of rescission and return of the premium), claims may be denied, though use caution as several states (not Florida) require that even after rescission claims of innocent third parties must be honored under Liability Coverage up to the minimum financial responsibility limits.  Another feature of this issue to consider is that several states, Florida included, have statutes, regulations and/or case law setting specific standards to be applied in considering what test of “materiality”  must be applied in determining if a material misrepresentation has occurred.

This is merely a recitation of many of the pertinent considerations and is not legal advice.

Jeff Nash

The Nash Group LLC

jnash@thenashgroupLLC.com