State RegulationsNC specificDifficulty 1/5
Under North Carolina insurance law, how are the statements an applicant makes in an application for insurance treated?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under G.S. 58-3-10, statements in an insurance application are representations, not warranties. A misstatement avoids the policy only if it was fraudulent or material to the risk, so an honest, immaterial error does not defeat coverage in North Carolina.
Why the other options are wrong
- A) Warranties are the common-law regime North Carolina rejects; no breach automatically voids the policy under G.S. 58-3-10.
- C) Statements do not serve as conclusive admissions; the insurer must show the misstatement was fraudulent or material before denying coverage.
- D) Acceptance of the first premium does not erase the application; the statements remain relevant if they were fraudulent or material.
Memory hook
Representations, not warranties - only fraud or materiality can sink the policy.