New York Child Abuse Identification and Reporting Practice Exam

What typically triggers the removal of coverage for fraudulent misstatements?

1. Incorrect filling of application forms

2. Willful deception or lying on the application

3. Failure to disclose previous conditions

4. Late submission of the application

The correct answer is: Willful deception or lying on the application

The removal of coverage for fraudulent misstatements is primarily triggered by willful deception or lying on the application. When an individual intentionally provides false information or misrepresents facts, this deliberate act of dishonesty undermines the insurance contract's foundation. Insurance agreements are based on the principle of utmost good faith, where both parties are expected to disclose truthful and relevant information. In cases of willful deception, insurers have the right to deny coverage or void the policy entirely because the applicant has failed to adhere to this principle. The presence of intentional misstatements can significantly alter the insurer's assessment of risk, affecting their decision to issue a policy or the terms under which the policy is granted. While incorrect filling of application forms, failure to disclose previous conditions, and late submission of the application can also have implications for coverage, they do not inherently involve fraudulent intent. Therefore, they do not trigger the severe consequences associated with willful deception.