Carolina Coverage: Can an Innocent Mistake Void your Insurance Policy in North Carolina

In North Carolina, when an insurance carrier alleges that a policy should be voided because of an application misrepresentation, the allegation is that an insured made a representation that is false and material, and the policy may be voided even if the statement was not fraudulent.1

When shopping for insurance, applicants should be checking and double checking the information being submitted on the insurance application. Applicants need to be reviewing the typed answers the agent is printing on the applications before they sign. The questions and the answers on these applications are very important and taking a few extra minutes to read the entire application is a very good use of time and energy. When a question is incorrect or untrue on an application, carriers raise material misrepresentations defenses. Reviewing the application BEFORE it is signed will save you from a misrepresentation legal battle after a loss. In North Carolina and other states, when a material misrepresentation has been alleged, an analysis needs to be done to determine whether this information was in fact, material to the issuance of the insurance policy. For North Carolina specifically, if the misrepresentation is material and is false then there is no requirement that the misrepresentation be intentional in order for the insurance company to avoid coverage.2 The insurance company is only required to show that the representations were material and were untrue.3

The standard in North Carolina to determine whether a statement is deemed a material misrepresentation is whether the knowledge or ignorance of the true statement would naturally influence the judgment of the insurer in making the contract.4 Many cases in North Carolina discuss what it means for something to be a natural influence to judgment and this is such a case by case or carrier by carrier standard that there is commonly an argument, but the carriers must show concrete evidence of the influence to meet the materiality requirement.

If you have questions about application misrepresentation issues, post your comments below or send me an email directly.


1 Matter of McCrary, 112 N.C. App 161 (1993).
2 Evanston Ins. Co. v. G &T Fabricators Inc., 740 F. Supp 2d 731 (2010).
3 Tolbert v. Mutual Ben. Life Ins. Co., 72 S.E. 2d 915 (1952).
4 Evanston Ins. Co. v. G &T Fabricators Inc., 740 F. Supp 2d 731 (2010).

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