An underwriter receives a health insurance application where a question asking about prior back injuries is left entirely blank. The insurer decides to issue the policy anyway without requesting the missing information. Six months later, the insured files a claim for back surgery, and the insurer attempts to deny the claim based on the incomplete application. Which of the following legal principles accurately describe the outcome of this dispute? (Select two)
- The insurer's action of issuing the policy without the information constitutes a valid waiver.Answer
- The insurer is legally estopped from denying the claim based on the missing information.Answer
- CThe incomplete answer is treated as a breach of a strict warranty, making the contract voidable.
- DThe rule of adhesion requires the court to resolve the missing information in favor of the insurer.
Answer
The insurer's action constitutes a valid waiver, and the insurer is legally estopped from denying the claim based on the missing information.
When an insurer accepts an incomplete application and issues a policy, it voluntarily relinquishes its right to the missing information, which defines a waiver. Consequently, the legal doctrine of estoppel prevents the insurer from later reasserting that right to deny a claim.
Step-by-Step Solution
Key Concept
Waiver and Estoppel in Incomplete Applications
Estimated Time:1m 0s