| An applicant's completed application for insurance may be attached to a policy issued by an insurer to the applicant. If the application is attached, it is considered part of the policy. Some state statutes require attachment and a statement in the policy that the application is attached.
Purposes of attachment
There are several purposes of attaching the application to the policy. It permits the insured to examine the application to ensure that it accurately contains his answers to the insurer's questions and to correct any mistakes, especially if an agent transcribed the answers from the insured's oral statements. The reason for ensuring the accuracy of the statements is because the insurer may regard such statements as "representations" by the insured that are covenanted to be true. If they are not true, the insurer may avoid liability on the policy.
Another purpose of attaching the application is to allow the insurer to assert certain defenses to liability under the policy. With the application attached and made part of the policy, any misrepresentations made in the application, such as the status of the insured's health, may enable the insurer to avoid liability. If the application is not attached, many statutes provide that the insurer may not assert any defense to the policy arising from the making of the application. However, if an insured's fraud in filling out the application is clear, the insurer may still avoid liability even if the application was not attached.
The attachment of the application to the policy also serves the purpose of helping courts determine the intent of the parties when attempting to construe the policy in a dispute.
What to attach
A copy of the whole application and any documents provided by the insured should be attached to the policy. For example, if the insured provides a financial statement upon which the insurer relies in deciding to issue a policy, such statement must be attached to the policy in order for the insurer to rely on a defense based on the content of the statement.
Correctness of attachments
The application must be accurate in order to be found a sufficient attachment. If there are material variations between the application at the time it was signed and the time it was delivered to the insured attached to the policy, the attachment will be insufficient. Thus, the insurer may not rely on defenses based on the application. If there are immaterial variations, the attachment may be found sufficient. The copy of the application must also be legible in order to be held correct.
How to attach
The application may be stapled to the policy or placed inside a sleeve provided with the policy package for the application.
Timing of attachment
The insurer generally must attach the application at the time of issuance of the policy, and it should be furnished while the insured is still alive.
Incorporation by reference
An insurer may incorporate the application as part of the insurance contract by reference in the policy, without attaching it to the policy, if no statute requires such attachment. Copyright 2010 LexisNexis, a division of Reed Elsevier Inc. |