In the case of Crotty v. Union Mutual Life Insurance Company, 1891, the U.S Supreme Court dealt with a dispute over an insurance policy claim. The plaintiff, Crotty, was the beneficiary of a life insurance policy taken out by his brother-in-law who had died in an accident. The defendant insurer refused to pay on grounds that there were misrepresentations and false statements made during application for the policy regarding health condition and habits of insured person which would have affected their decision to issue it or not. However, these alleged misrepresentations were not directly related to cause of death (accidental fall). The court ruled in favor of Crotty stating that even if there were inaccuracies in representations about lifestyle or health conditions at time when policy was issued; as long as they did not contribute directly towards cause of death (in this case accidental), then they cannot be used as basis for denying payment on life insurance policies after holder's demise.

In the dissenting opinion for Crotty v. Union Mutual Life Insurance Company, Justice Brewer argued that the insurance company should not be allowed to avoid its obligations under a life insurance policy due to an alleged misrepresentation by the insured about his health condition. He contended that it was unfair and against public policy for insurers to issue policies without conducting their own medical examinations or investigations into applicants' health status, then later claim fraud when a claim is made. According to him, if an insurer chooses not to investigate at all before issuing a policy, they should bear the risk of any inaccuracies in information provided by applicants rather than being able to use these as grounds for denying claims later on.