A misrepresentation in an insurance application is best defined as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A misrepresentation is a false statement of a material fact made by the applicant that induces the insurer to issue the policy, accept the risk, or charge a particular premium. For the insurer to rescind, the statement must be material, meaning the insurer relied on it in a way that affected the decision or the rate. Truthful disclosures are by definition not misrepresentations, and the applicant's statements must be compared against the facts at the time they are made. Misrepresentation doctrine works together with concealment and warranty rules to protect the integrity of the underwriting process.
Why the other options are wrong
- B) A misrepresentation must be false; truthful statements, material or not, are not misrepresentations.
- C) A truthful disclosure is the opposite of a misrepresentation; the applicant is disclosing rather than misstating a fact.
- D) Statements by the insurer about policy terms and dividends are governed by marketing and sales rules, not by the doctrine of applicant misrepresentation.
Memory hook
Misrepresentation = a false fact the insurer leaned on. No reliance, no rescission.