Completing your insurance application is often viewed as an afterthought— just “paperwork” required to secure protection from a new insurance provider.

After all, the decision has already been made to place the coverage, and all that remains is the application, right? Not so fast… Recent actions by insurance carriers suggest that applicants would be well advised to view that paperwork as critically important to their protection—both in the short- and long-term.

The reason is that data entered on an application is classified as a “representation” of the insured’s exposure at the time he or she completes the paperwork. Representations are assertions of fact made by the applicant, specific to a point in time. When filling out a homeowners application, for example, the purchaser is legally obligated to answer all questions accurately, as the information provided determines the insurance company’s decision to enter into the contract.

This is called the “duty of disclosure” and is included in the “doctrine of utmost good faith,” a key principle in an insurance contract that emphasizes mutual faith between the company and applicant.

Jim Keidel is a managing partner of Keidel, Weldon & Cunningham, LLP, a law firm specializing in insurance-related matters. Keidel notes that, “Insurance companies have an obligation to fully investigate every claim and to apply the policy language and limitations to each event.” In a worst-case scenario, Keidel explains, “They can deny claims if the exposure represented on the application does not match the exposure at the time of the loss.”

Need an example? Recently in New York, an insurance carrier denied coverage following a house fire when the carrier discovered there was a pit bull in the home that had been present at the time of application—pit bulls are an animal on the insurance company’s prohibited list.

The application had represented there were no dogs in the household.

So, the company reasoned that had the pit bull been declared on the application, it would have never issued a policy in the first place.

That situation, which also involves the insurance broker, remains in litigation.

In another case, a homeowner purchased a home and represented it on the insurance application as owner-occupied. Shortly after, the homeowner relocated overseas and never actually occupied the home, instead electing to rentit. Later, when a smoke-damage loss occurred in the home, the insurance carrier denied coverage, arguing that the policy was void because the home was never “owner occupied.”

Keidel says he’s seen repeated denials like these caused by misrepresentations on the original application. “We strongly recommend that applicants and insurance brokers dutifully go through each and every question on the application and answer each question as completely and accurately as possible.”

When determining coverage at the time of a claim, the original application is every bit as important as the language in the insurance contract. So, completing the application cannot be viewed as an afterthought.

An insurance professional will ask open-ended questions designed to elicit accurate responses; and our best advice? Use a professional insurance broker and take the time necessary to fully and accurately complete “the paperwork.”

This article was originally published in the December/January 2016 issue of Worth.