An applicant's answer on an accident and health insurance application later proves to be inaccurate. Under North Carolina insurance law, the misstatement will defeat coverage only if it is:

Why D is correct

Under G.S. 58-3-10, statements made in an insurance application are representations, not warranties. A misrepresentation avoids the policy only if it is fraudulent or material to the risk; a trivial or immaterial inaccuracy, even if unintended, does not void coverage. This rule protects insureds from technical application errors being used to escape legitimate claims.

Why the other options are wrong

• A) G.S. 58-3-10 draws no distinction between written and oral statements; the test is whether the misstatement was fraudulent or material.
• B) Mere intent without materiality is not enough under G.S. 58-3-10; a minor intentional inaccuracy that is not material to the risk does not defeat coverage.
• C) The two-year mark relates to time limits on certain defenses in the A&H standard provisions under G.S. 58-51-15, not to the representation-versus-warranty rule of G.S. 58-3-10.

Memory hook

Representations forgive the trivial; fraud or materiality sinks the ship.