By Kitti Peters, The Reschini Group
Errors and omissions. Sounds like the human race in three little words. We leave things out, we make mistakes. Human nature, right? Completely understandable and forgivable, right?
Wrong. No. Not when it comes to insurance, my friend. In this world, human nature can be expensive.
When completing an application and providing documentation as part of acquiring business-related insurance, if you leave out some item of material importance, or misrepresent facts – even if by an unintentional accident – and if that situation is discovered later, it could render the insurance policy null and void. That means claims would not be paid, and you would need to secure a new policy.
Many insurers require specific applications for underwriting certain lines of business, to include language forcing the applicant to verify that the answers on the application are true and accurate and that all attachments and materials are considered representations and warranties of the applicant, and considered as physically attached to the policy. The insurer’s application also implicates that the insurer – by agreeing and accepting all of this information – will issue a policy relying on the truth and accuracy of such representations and warranties.
In short, that means everything provided as part of the application had better be complete and truthful. The temptation may exist to try and skirt conveying the full picture (as in stating incomplete revenues, or misrepresenting the number of employees) in order to lower the cost of insurance premiums. But keep in mind that, should the full and accurate scope of the situation come to light, the cost may be far greater than any potential savings from misleading representations.
It is critical to understand the questions asked on an application and how best to answer them. When requested to complete a specialized application other than an ACORD form, and to supply data requested for underwriting in conjunction with a specialized application, the need to consult a professional advisor becomes even more imperative.
The team at The Reschini Group can assist with the completion of the application and request and gather the information necessary for the company to underwrite the risk and comply with the representations and warranties in the application. Contact us to learn more.
Copyright 2016 The Reschini Group
The Reschini Group provides these updates for information only. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.