The best practice for every insurance agent, broker and applicant is to always read every word before signing the application. An applicant who embraces the tedious but important task of reviewing the terms of an insurance application is likely to avoid disputes and litigation. The insurance agent or broker who asks every question on the application for insurance, and ascertains that the applicant understands each question, that the answers on the application are the answers of the applicant and that the applicant understands that the insurer will rely on the information in making its decision to insure, will avoid disputes and litigation.

In Kristen Cox Morrison v. Paul Allen Et Al, No. M2007-01244-SC- R11-CV, filed February 16, 2011, an insurance agent filled out an application for life insurance without asking all of the questions of the person seeking insurance. One of the questions on the application asked: “In the past 5 years, have any proposed insureds been charged with or convicted of driving under the influence of alcohol or drugs or had any driving violations?” The agent caused the application to answer “no” although he knew or should have known the answer was “yes.” Had the applicant seen this question and corrected the answer, the litigation might have been avoided.

In Morrison, the basic facts were that Mr. and Mrs. Morrison obtained life insurance policies on each of their lives from their insurance agents, Roberts and Allen. The agents filled out the applications and sent them to the Morrisons to sign with instructions on where to sign, which they did. Although the applications contained the typical warnings regarding misrepresentations and contained an affirmation that the statements therein had been read, neither of the Morrisons read the applications before signing them. Two months later, Mr. Morrison died. The insurance company then denied Mrs. Morrison's claim for benefits under the policy, alleging misrepresentations in the application (failure to disclose a DWI). After filing suit, Mrs. Morrison ultimately settled her claim with the insurance carrier for $900,000 ($100,000 less than policy limits), but proceeded to trial against the insurance agents, Roberts and Allen. After a bench trial, the trial court awarded a judgment to Mrs. Morrison against the defendant agents for breach of contract and negligence and further found the defendants violated the Tennessee Consumer Protection Act.