When Life Insurance Denials Happen, The Insurer Doesn’t Always Get the Last Word

We recently secured a victory in court for our clients when we represented the sons of their deceased mother. The insurance company had issued two life insurance policies totaling $1,500,000 covering the deceased mother’s life, but denied the life insurance benefits to the surviving family members when the mother passed away. After the family submitted the life insurance claim, the life insurance company performed a long investigation of the claim, before denying it, because, according to the life insurance company, the mother had misrepresented her net worth in the life insurance application. The family believed that the net worth listed in the application was accurate and we sued the life insurance company on behalf of the family. Once the lawsuit was started, Metropolitan Life asserted that our clients’ mother made additional misrepresentations in the application that justified the company’s denial of the life insurance claim, even though the insurance company had never alleged the additional misrepresentations in its communications with the family.

The trial court decided the case in favor of the insurance company and dismissed the case based on the newly-alleged claims of misrepresentation, even though it found that the representation of net worth was accurate. However, we appealed the order and argued that the life insurance company could not rely on the alleged misrepresentations that were claimed only after the lawsuit was filed. The New York Supreme Court, Appellate Division, First Department agreed with our legal argument. The Court found that the life insurance company was barred from claiming any misrepresentations other than the net worth of our clients’ mother. The Appellate Division also found that the representation regarding her net worth in the application was, in fact, accurate. Consequently, the Appellate Court not only reversed the trial court’s order dismissing the case but decided the case in favor of our clients. Although the life insurance denial was initially bad news for our clients, the life insurance company didn’t get the last word.

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