State RegulationsNY specificDifficulty 3/5
Three years after an individual accident and health policy was issued in New York, the insurer discovers that the insured deliberately and materially falsified his medical history on the application. What may the insurer do?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under N.Y. Ins. Law §3216(d)(1)(B), the two-year bar on contesting an individual health policy based on pre-issue health does not extend to fraudulent misstatements in the application. Because the insured deliberately and materially falsified his medical history, the insurer may still contest the policy even though the contestable period has run. An honest mistake would have been shielded once two years passed; deliberate lies are not.
Why the other options are wrong
- A) The contestable-period protection is subject to the fraud exception.
- C) No criminal conviction is required; civil fraud in the application is enough.
- D) Nonrenewal for material misrepresentation is possible, but it does not address the fraudulently obtained policy itself.
Memory hook
Incontestability shields honest mistakes, not deliberate lies.