In any type of insurance, the determination of the insurance company to assume the risk with regard to any particular person or thing is based on the application submitted by the person desiring the insurance. It is through the medium of the application that the company secures the information which it desires with regard to the particular risk. Logically, therefore, the insurance company should be protected if incorrect statements are made in the application. On the other hand, the insured is entitled to be protected by the insurance when he has been paying premiums and basing his conduct on the supposition that he has an effective coverage. A court is thus faced with a conflict between these two policies. It may resolve this difficulty by adopting any one of three possible viewpoints it may allow the insurance company a defense in any case where there has been a material misstatement in the course of negotiation, or it may allow the defense only if the applicant is in a position where he knows or should know of the the falsity of the statement at the time he makes it, or it may go further and require an intent to deceive on the part of the applicant.
Leo D. Bloch,
Intent to Deceive in Applications for Insurance Policies,
Wash. L. & Rev.
Available at: https://digitalcommons.law.uw.edu/wlr/vol10/iss2/3