In the 1943 case of Bell v. Preferred Life Assurance Society, the U.S Supreme Court ruled on a dispute involving an insurance policy claim. The plaintiff, Mrs. Bell, was denied her late husband's life insurance payout by Preferred Life Assurance Society due to alleged misrepresentation in his application about his health condition and alcohol consumption habits. The company claimed that Mr. Bell had misrepresented or concealed material facts regarding these issues which would have influenced their decision to insure him at all or at least affected the premium rate charged for such coverage. The court held that under Alabama law (where the contract was made), if an insurer wishes to avoid liability based on false representations in an application for insurance, it must show not only that they were fraudulent but also material - meaning they substantially increased risk assumed by insurer beyond what it knowingly agreed to take. The Supreme Court reversed lower courts' decisions favoring the insurer and remanded back for further proceedings consistent with its opinion because there wasn't sufficient evidence presented showing these misrepresentations materially affected either acceptance of risk or hazard assumed by them.

The dissenting opinion in the case of Bell v. Preferred Life Assurance Society argued that the majority's decision to uphold a lower court ruling, which found in favor of an insurance company denying payment on a policy due to alleged misrepresentation by the insured, was incorrect. The dissent contended that there were significant factual disputes regarding whether or not such misrepresentation had occurred and if it was material enough to justify denial of payment. They believed these issues should have been resolved through trial rather than summary judgment. Furthermore, they disagreed with the majority's interpretation of Alabama law concerning insurance contracts and felt it unfairly favored insurers over policyholders.