A financial advisor is processing a high-limit disability income insurance application. After the client signs the document and provides the initial premium check, the advisor returns to the agency office and notices that the specific section regarding "Other In-Force Disability Coverage" was left entirely blank. Recalling a previous verbal conversation where the client mentioned having no other policies, the advisor writes the word "None" in the blank space to prevent underwriting delays, without having the client initial the addition. The application is submitted and the policy is issued at standard rates. Eight months later, the client files a massive claim. During the investigation, the insurer discovers the client actually possessed three other significant disability policies at the time of application, resulting in severe over-insurance. Which of the following best describes the legal consequence of the advisor's method of completing this application?
- ABy issuing the policy, the insurer permanently waived its right to contest the over-insurance because the original question was left unanswered by the applicant at the time of signing.
- The insurer's ability to deny the claim for material misrepresentation is severely compromised because the false statement was inserted by the advisor without the applicant's initials, meaning the applicant did not legally make the representation.Cevap
- CThe alteration is legally valid and binding on the applicant because advisors possess implied authority to correct obvious application omissions based on prior factual disclosures.
- DThe insurer can automatically deny the claim because the advisor's written insertion of "None" functions as an absolute warranty that strictly guarantees the applicant's eligibility status.