By: Attorney Michael Lev

Life Insurance Claim: Duty of Disclosure and Causal Link

An important ruling in insurance claims law established a significant principle: breach of the duty of disclosure alone does not entitle an insurer to reduce or deny benefits unless the insurer proves a causal link between the undisclosed information and the insured event. The case involved a claim for payment of 385,000 NIS under a life insurance policy.

Case Overview

The insured purchased a life insurance policy and later filed a claim for 385,000 NIS following a covered event. The insurance company rejected the claim, arguing that the insured had violated the duty of disclosure at the time of policy issuance by failing to disclose pre-existing medical conditions. The insured denied any intentional concealment and argued that even if there was a breach, there was no causal connection between the non-disclosed information and the event giving rise to the claim.

Legal Principles and Court Analysis

The court examined the Insurance Contract Law and leading precedents on the duty of disclosure in life insurance. The court held that the insurer cannot automatically reduce benefits merely because an insured failed to disclose information. The following principles emerged:

• Duty of disclosure: An insured must disclose all material facts known to them that a reasonable insurer would consider relevant to the risk.
• Causal link requirement: Even where a breach of the duty of disclosure is proven, the insurer must establish a direct causal connection between the undisclosed fact and the occurrence of the insured event.
• Proportionality: Israeli insurance law requires that any reduction in benefits be proportionate and linked to the actual impact of the non-disclosure on the insurer’s risk assessment.
• Burden of proof: The burden falls on the insurer to prove both the breach and the causal link – it cannot simply assert that non-disclosure justifies rejection.

The court found that while the insured had failed to disclose certain medical history, the insurance company could not demonstrate that this non-disclosure had any bearing on the event that triggered the claim. The causal link was absent, and therefore the insurer’s refusal to pay was unjustified.

Practical Steps if Your Insurance Claim Is Rejected

1. Request the rejection letter in writing – insurers are required to provide detailed written explanations for any claim denial.
2. Review the alleged breach – examine exactly what information the insurer claims you failed to disclose and whether it is genuinely material.
3. Challenge the causal link – if the insurer cannot prove that the undisclosed information contributed to the insured event, the rejection may be overturned.
4. Obtain expert medical or professional opinions – independent expert evidence can be decisive in establishing or refuting causal connection.
5. Consult an insurance claims attorney – the legal standards are complex and an experienced attorney can assess the strength of your case and negotiate or litigate on your behalf.

Frequently Asked Questions

Contact Lev-Taieb Law Firm

If your insurance claim has been rejected on grounds of alleged non-disclosure, the attorneys at Lev-Taieb Law Firm are here to help. With 19 years of experience in insurance claims litigation, we offer flexible payment terms and professional, personalized service.

Call now: 03-XXXXXXX

Related topics: Insurance Claims | National Insurance | Case Results

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