Insurance companies will refuse to pay claims due to two similar, yet different, reasons:  fraud and lack of cooperation.  This article will discuss an insurer’s claim an insured property owner committed fraud.

There is a distinction between criminal fraud proven by a prosecutor and civil fraud pursued by insurance companies in litigation.  Prosecution is handled by county attorneys, and like all criminal law, requires the prosecutor to prove a crime was committed beyond a reasonable doubt.  Civil actions, pursed by insurance companies against their customers, have a much lower burden of proof.  Insurers need only prove it is more likely than not a property owner committed fraud.  The reason for the difference is criminal prosecution results in a criminal penalty, whereas civil fraud results in voiding an insurance policy.

This article discusses civil insurance fraud pursued by insurers.  Insurance fraud under Minnesota statutes requires an insurer to prove three elements:  1) a misrepresentation by an insured property owner, 2) intent to commit the misrepresentations, and 3) the misrepresentations are material.  By operation of law, this standard is found in an insurer’s policy.  I encourage all people accused of fraud to look at their policy for the exact language an insurer must prove.


The essence of a misrepresentation is when an insured states a fact that is false.  A misrepresentation is usually based on nouns and verbs, not adjectives and adverbs.  If a property owner says they had a “horrible and traumatic fire”, the search for fraud in this statement would focus on whether there was a fire.  Words like “horrible” and “traumatic” are subjective, more opinion than fact, and thus difficult to attack as false.  Whether there was a fire is a fact.  If there was no fire, the fact is false and a misrepresentation.

This principle is not absolute.  If an insured said she had a “massive fire” and in fact it was a little kitchen fire, the phrase “massive fire” can be the basis for fraud.  Yet the general principle is the focus is on “fire” as it is a provable fact.

Misrepresentations can occur when a property owner makes a false statement a) when applying for insurance, b) whether a loss event occurred, and c) the size – or amount – of their damaged property.  Any of these scenarios can void an insurance claim.


In Minnesota, only willful or intentional misstatements calculated to deceive the insurance company will void the policy. Henning Nelson Constr. Co. v. Fireman’s Fund Am. Life Ins. Co., 383 N.W.2d 645, 654 (Minn. 1986).  Honest mistakes do not void a policy.

Willful means the insured property owner has an intent to defraud, conceal or misrepresent a material fact. That intent can arise when the insured and insurer are negotiating the insurance policy, whether there was a loss, or a false fact made during the claims process.  A person behaves willfully when he or she knows or has reason to know that an act is prohibited by an insurance policy and intentionally does it anyway.


Insurance companies must prove that a misrepresentation is material.  Mattice v. Minn. Prop. Ins. Placement, 655 N.W.2d 336 (Minn. Ct. App. 2002).  Material means important, or substantial.  Case law in Minnesota holds that the misrepresentation must be significant enough to impact the insurer’s decision-making process.  Berthiaume v. Minnesota Mut. Life Ins. Co., 388 N.W.2d 15 (Minn. Ct. App. 1983)

To illustrate the point using an extreme example, let’s imagine a house fire.  The insured property owner has $500,000 in coverage of lost contents, and can prove $600,000 is the value of what was lost.  If a property owner intentionally lies about how many socks were in his drawers, the insurer has the burden to prove that lie is material.  The property owner has the argument that another $40 in socks on top of $600,000 in lost value is not material to the insurer’s position.  The insurer is bound to pay $500,000 anyway.

I have heard insurance defense attorneys argue that any instance of an intentional misrepresentation voids all coverage.  The problem with that argument is Minnesota law requires an insurer to prove the fraud is material.  Of course, it is extremely unwise for a property owner to lie about anything, including $40 on top of a $600,000 loss.  Nothing in the law or common morality endorses lying.  Yet Minnesota law does recognize that a misrepresentation has to impact the insurer in a material or substantial way.

Contact me if you have been accused of fraud and need legal representation in a civil action (litigation).  E-mail me at