Concealment and Misrepresentation in Insurance Transactions

Concealment or Misrepresentation

In general, concealment involves the suppression or withholding of information.  Intentional concealment of a material fact by an applicant for insurance provides the insurer with a valid defense to a claim or the basis for rescission of the insurance contract.  In Holtzclaw v. Bankers Mutual Insurance Co., 448 N.E 2d 55 at page 58 (Ind. App., 3d Dist. 1983), the applicant concealed the names of the treating physicians.  In most states, not including California, if the applicant’s failure to reveal information is not an intentional concealment, such conduct does not constitute a sufficient basis for a defense by an insurer. [See Sebring v. Fidelity-Phoenix Fire Insurance Company, 255 N.Y. 382, 174 N.E. 761 (1931).]

Under Michigan law, an insured’s misstatement on a proof of loss will not prevent recovery on a fire insurance policy unless the false statement was made knowingly and willfully and with the intent to defraud the insurer. [Steele v. Great American Ins. Co., 850 F.2d 692 (6th Cir. 1988); Campbell v. Great Lakes Ins. Co. of Chicago, 228 Mich. 636 (1924) and Barrett v. Connecticut Fire Ins. Co., 195 Mich. 209 (1917)).]

The failure of an insured to reveal prior losses in an application has been held to be a material misrepresentation sufficient to form a basis to rescind a policy.  Metropolitan Property and Liability Insurance Company v. Insurance Commissioner of Pennsylvania, 580 A. 2d 300 (Pennsylvania, 1990).

The hiring of a willing accomplice to set a dwelling or building on fire so that defendant could fraudulently collect insurance proceeds is no simple, impulsive criminal act. Such a crime includes, among other things, premeditation, planning, concealment and knowledge. [State v. Skillicorn, 297 Or App 663 (Or. App., 2019)]

© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

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