For a false statement on an application to make a California policy voidable as misrepresentation, the insurer must show that:

Why A is correct

Under California law, a misrepresentation makes a policy voidable when the statement is false and material, meaning the insurer relied on it in deciding whether to issue the policy or what premium to charge. The test focuses on the influence the statement had on the insurer's underwriting decision: if the insurer would not have issued the policy, or would have issued it on different terms, had it known the truth, the misrepresentation is material. Intent to deceive is not required, so even an innocent but material misstatement can support rescission. What matters is the statement's effect on the insurer's decision, not the insured's motives, and the statement must be made by or on behalf of the applicant in connection with the application.

Why the other options are wrong

• B) California law does not require fraudulent intent for a misrepresentation to make a policy voidable. Even an innocent misstatement that is material can support rescission, because the test is whether the insurer was induced to issue the policy based on a false statement, not whether the applicant acted deceitfully.
• C) Whether the insured personally benefited from the statement is irrelevant to the materiality analysis. The question is whether the insurer relied on the false statement in deciding to accept the risk or set the premium; the insured's benefit or lack of benefit does not enter the inquiry.
• D) For the statement to affect the policy, it must be made by or on behalf of the applicant in connection with the application. A statement made by an unrelated third party who is not part of the application process is not the applicant's misrepresentation and does not make the policy voidable.

Memory hook

False plus relied-upon by the insurer equals a voidable policy.