You buy or lease a car, you sign a
contract. Buying a house? Sign not only a contract to buy it, but also
a contract with the bank loaning you the money!!
Did you know that signing an application for
insurance is considered to be a “warranty contract”? The definition is simple…..you are stating
that you have read the application in its entirety, and by signing it you are
“warranting” that the information is accurate.
Why is this important? If you have read your policy (and only those
with insomnia do…) contained in every policy is an important clause called the
“Misrepresentation Clause”. It gives
the company the legal right to deny a claim if the information that you have
said was true when you signed the application, actually wasn't.
Things like hiding an aggressive breed of a
dog you may own, or even the name of the fire department that services your
property being incorrectly listed can trigger this clause.
Insurance Companies base the cost of
insurance on the likelihood of losses occurring.
An aggressive breed of dog sometimes makes an
insurance company charge you extra in your premium. They may even go as far as denying your
application if the dog you own is on their list of unacceptable breeds. If you sign an application that states you
don’t have any dogs, or you don’t have a dog that’s considered to be
aggressive, and they bite someone, the insurance company can deny your claim!
Look at the primary fire department listed on
the application, and verify that it’s correct.
In outlying areas, you may have a township fire department that
responds, and not the city that your address reflects.
Although I have yet to see an
insurance company deny coverage under the “Misrepresentation Clause”, there is
always a first time. Do you want to be
the one to “test the waters”? Do you
want to do business with an agency that willfully jeopardizes your assets by
improperly rating your policy? Remember
folks, by signing that application, you’re saying what’s on it is true! Make sure it is…….
Spalding Insurance Agency is an independent agency with two locations in mid-Michigan to service your insurance needs.For a quote on your personal or business insurance click here.
