State RegulationsAZ specificDifficulty 3/5
Well past the 2-year mark from issue, an Arizona insurer reviews an accident and health claim and finds that the applicant overstated his height on the application — an innocent error with no bearing on the claim. Under A.R.S. 20-1346, how should the insurer treat the misstatement?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
A.R.S. 20-1346 provides that after 2 years from issue no misstatement, except a fraudulent one, shall void the policy or be a ground to deny a claim. An innocent height error is neither fraudulent nor a proper ground of denial at this stage, so the claim must be paid notwithstanding the application discrepancy.
Why the other options are wrong
- A) Rescission for a non-fraudulent misstatement is barred by A.R.S. 20-1346 once the 2-year period from issue has run.
- B) The blanket proposition that any misstatement justifies denial is exactly what A.R.S. 20-1346 forbids after the 2-year period, except for fraud.
- D) Suspending the claim for examination may be a claims-handling step under A.R.S. 20-1354, but it does not supply a lawful basis to treat the aged misstatement as a defense.
Memory hook
Innocent errors die at the 2-year mark; the claim survives.