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Misrepresentation or Concealment of a Material Fact  

https://zalma.com/blog

To constitute fraud, an insured must have concealed or misrepresented a  material fact with the intention of inducing an insurer to pay a claim  it would not, otherwise owe had it known the true facts. The facts that  are deemed to be \\u201cmaterial\\u201d for purposes of denying a claim or voiding a  policy are not clearly defined and therefore each case must be  evaluated separately.  Generally, a fact is material to the application for insurance if it  might have influenced a reasonable insurer in deciding whether to accept  or reject the risk on the same terms and conditions.  Material facts  intentionally concealed or misrepresented with intent to mislead the  insurer that result in damage to the insurer are fraudulent. Fraud, at  the option of the insurer, allows the insurer to void the policy. A  misrepresentation after a loss as to a single material fact will forfeit  the entire insurance contract.  An insured cannot commit a \\u201csmall\\u201d fraud any more than he can be just a  little dead. Once caught in a small fraud, the insured cannot demand  that he or she be paid the legitimate part of the claim and expect the  insurer to forgive the attempted fraud.  Determining the existence of a \\u201cmisrepresentation\\u201d is not always  straightforward. In Suggs v. State Farm Fire and Casualty. Co., 833 F.2d  883 (10th Cir.1987), an initial investigation by an insurer and the  state fire marshal concluded that a residential fire was the result of  arson. The fire marshal further concluded that it was the insured who  set the fire. The insured was arrested and charged with arson.  With criminal charges pending, the insured hired experts who concluded  that the fire was probably caused by an electrical malfunction. Criminal  proceedings were then dismissed. Another expert retained by the insurer  later concluded that the fire was not of electrical origin, and the  insurer denied the insured\\u2019s fire damage claim on the ground that the  insured had intentionally set the fire. The insured responded by suing  for benefits under the policy, as well as for bad faith. A jury found in  favor of the insured on both causes of action.