State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
Under California Insurance Code Section 334, the materiality of a fact is determined by:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Section 334 provides that materiality is determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming an estimate of the disadvantages of the proposed contract or in making inquiries. In short, the test is what a reasonable insurer would consider important in deciding whether to accept the risk — not whether a loss actually happened or whether the applicant meant to deceive.
Why the other options are wrong
- A) Section 334 expressly rejects judging materiality by the event, that is, by whether the loss occurred.
- B) The size of the claim is an outcome-based measure, explicitly rejected in favor of the influence-on-the-insurer test.
- C) Intent to deceive bears on fraud, but materiality under Section 334 is objective and focuses on the fact's influence.
Memory hook
Material = would it have changed the insurer's decision? Outcome and intent do not decide materiality.