State RegulationsAZ specificDifficulty 2/5
An insurer discovers, three years after issuing an Arizona accident and health policy, that the applicant intentionally lied about a material health fact on the application. Under A.R.S. 20-1346, may the insurer deny a pending claim on this basis?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
A.R.S. 20-1346 bars the use of application misstatements to void coverage or deny claims after 2 years from issue, but it carves out fraudulent misstatements. A knowing, material lie is not shielded by the passage of the 2-year period, so the insurer may still raise it against the pending claim despite the elapsed time.
Why the other options are wrong
- A) The 2-year limit in A.R.S. 20-1346 is not absolute; fraudulent misstatements are expressly excluded from the protection.
- C) A.R.S. 20-1346 contains no premium-refund condition for raising the fraud exception; the fraudulent misstatement remains usable as stated.
- D) No approval from the Director of the Arizona Department of Insurance is required to invoke the fraud exception under A.R.S. 20-1346.
Memory hook
Two years forgives mistakes, not fraud.