State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which statement correctly distinguishes a fraudulent misrepresentation from an innocent misrepresentation in insurance?
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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 made to induce the insurer to accept a risk. A fraudulent misrepresentation involves intent to deceive (CIC Sections 780-784 and 338); an innocent misrepresentation is a false statement made without intent to deceive. Under California law, a material false representation can support rescission whether or not it was fraudulent — materiality and effect on the risk are what matter, though fraud may trigger additional penalties.
Why the other options are wrong
- B) Innocent but material misrepresentations can also void the policy; the law does not require fraud for rescission.
- C) The rule does not distinguish remedies that way; both are judged on materiality, and neither 'automatically' voids nor merely reduces a claim.
- D) No such signature-in-person requirement exists for either; applications are normally signed, but that is not the distinction between the two.
Memory hook
Fraud = lied on purpose. Innocent = lied by mistake. Both can undo the policy if the fact mattered.