More than three years have passed since an accident and health policy was issued. The insurer discovers the applicant made an honest, non-fraudulent misstatement in the application, and the insured also has a pre-existing condition that was not specifically named in the policy's exclusions. A claim is now submitted. Under 40 P.S. § 753(A)(2), what may the insurer do?

Why D is correct

40 P.S. § 753(A)(2) bars the insurer from using non-fraudulent misstatements to void the policy or deny a claim after 3 years from issue, and the same 3-year limit reaches pre-existing conditions that were not specifically excluded by name in the policy. Only fraud survives the deadline. The insured who was honest enough to avoid fraud becomes untouchable on old application defects after the period runs.

Why the other options are wrong

• A) Voiding for non-fraudulent misstatement is exactly what the 3-year limit of 40 P.S. § 753(A)(2) forbids after the period has run.
• B) Benefit reduction is the misstatement-of-age or misstatement-of-sex remedy, not the treatment of old non-fraudulent health misstatements past the 3-year limit.
• C) Pre-existing conditions that were not excluded by name fall within the same 3-year bar; they cannot be raised forever.

Memory hook

Three years and honest answers wash clean — fraud is the only stain that stays.