8 Questions
What is the definition of a representation in an insurance application?
Oral or written statements that are true to the best of the applicant's knowledge and belief
When can a representation be changed or amended?
Prior to the policy issue
What is a misrepresentation that does not affect underwriting?
A misrepresentation that is not material
What could be grounds for voiding an insurance contract upon discovery?
Material misrepresentation
What defines concealment in an insurance application context?
Failure to voluntarily disclose material facts
What represents intentional deception in an insurance application?
Fraud
Who can rescind or cancel a contract if fraud is determined?
Both parties
What is a warranty in the context of insurance applications?
A statement guaranteed to be true made by the insurer or its representative
Study Notes
Statements on Insurance Applications
-
Representations
- Oral or written statements made by an applicant when completing an application for insurance
- Must be true to the best of one's knowledge and belief
- Made prior to policy issuance and can be changed or amended prior to policy issue, but not afterward
- Materiality of the statement depends on whether it influences policy issue
- Not considered warranties
Misrepresentation
- A false statement that does not affect underwriting
- Is not material and will not affect policy issue
- Examples: mailing address error
Material Misrepresentation
- A false statement or concealment important to policy issuance
- Typically includes: health statements, driving record, drug/alcohol abuse, hazardous activities
- Severity determined by materiality
- Considered false when facts fail to correspond with assertions or stipulations
- Can be grounds for voiding the contract upon discovery
Concealment
- Failure to voluntarily disclose material facts relevant to underwriting
- Failure to communicate that which a party knows and ought to communicate
- Regardless of intent, may be grounds for rescission by either party
Fraud
- Intentional deception
- Often associated with filing a false claim
- If determined to be fraudulent, either party may rescind or cancel the contract
Understand the importance of representations in insurance applications, including oral and written statements made by applicants. Learn about materiality, amendments, and policy issuance.
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