Bill > S484

This bill amends existing law concerning insurance policies to prevent fraud by allowing insurance companies to use fraudulent statements made in an application for a life, accident, or sickness insurance policy, or for a reinstatement of such a policy, as a defense against a claim or as grounds for rescission (canceling the policy). This defense can be raised regardless of how much time has passed, as long as the fraudulent statements were made with the actual intent to deceive and gain coverage the applicant wouldn't otherwise qualify for, and the defense is relevant to the policy. However, the bill clarifies that unintentional mistakes made by an insured during the policy negotiation process will not be considered fraud, and any action to rescind a policy based on fraud must be brought within three years of the insurer discovering or reasonably should have discovered the fraud. This provision applies to new policies issued in the Commonwealth and existing policies that have not yet become incontestable, meaning the insurer can no longer deny claims based on misrepresentations in the application.