A disability policy has been in force for three years. Under the 'Time Limit on Certain Defenses' provision (CIC §10350.2), the insurer may NOT use a misstatement in the application to void the policy or deny a claim unless the misstatement was:

Why A is correct

CIC §10350.2 requires disability policies to include a time-limit provision: after two years from the date of issue, no misstatements made by the applicant — EXCEPT fraudulent misstatements — may be used to void the policy or deny a claim. Once the two-year window passes, innocent or unintentional misstatements no longer give the insurer a defense. Fraud is carved out of the time limit, so a fraudulent misstatement can still be used even after the two-year period.

Why the other options are wrong

• B) An unintentional misstatement is precisely what the two-year time limit bars the insurer from using after the period expires.
• C) How the misstatement was discovered is irrelevant; the issue is whether the misstatement was fraudulent.
• D) Occupation misstatements are addressed separately by Sections 10369.2-10369.6, and the time limit still applies unless the misstatement is fraudulent.

Memory hook

Two years and innocent mistakes are forgiven. Fraud, however, never clocks out.