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The Consequences of Insurance Fraud

Don't fill out an insurance application until you understand it.

Federal
State:

Zion Christian Church v. Brotherhood Mutual Insurance Company, 126 Fed.Appx. 235 (6th Cir. 2005)

Some church leaders view an insurance application as an annoyance to be completed as quickly, and with as little thought, as possible. Such an approach can be very risky, since a church's insurance policy can be nullified by the insurance company on the basis of fraud if the application contains any material misrepresentations. One church learned this lesson the hard way.

facts

An insurance company issued a policy to a Michigan church that provided coverage in the areas of general liability, personal injury liability, sexual acts liability, sexual harassment liability, directors and officers liability, employment practices liability, workers compensation, and excess liability. The church requested an additional "sexual acts liability coverage endorsement." To get the additional coverage, ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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Posted:
  • March 1, 2006

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