State RegulationsNY specificDifficulty 3/5
More than 2 years after an individual accident and health policy was issued in New York, the insurer learns that the insured had knowingly and fraudulently misrepresented a diagnosed heart condition in the application. Under N.Y. Ins. Law §3216(d)(1)(B), what is the effect of the time limit on certain defenses?
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 C is correct
Under N.Y. Ins. Law §3216(d)(1)(B), the time limit on certain defenses bars the use of misstatements to void the policy or deny claims after 2 years from the date of issue, except fraudulent misstatements. Fraud is carved out of the protection, so an insurer that discovers a knowingly false health statement after the 2-year period may still raise it; only innocent or nonfraudulent misstatements become unusable after the period runs.
Why the other options are wrong
- A) Incontestability under the provision protects only nonfraudulent misstatements; fraudulent ones remain contestable beyond the 2-year period.
- B) The provision does not force the insurer to pay first and sue later; because the misstatement was fraudulent, the insurer may deny or contest directly.
- D) Fraud is the exception that survives the 2-year period; discovering it after that period does not bar the defense.
Memory hook
Two years bars honest mistakes, but fraud stays contestable.