An untrue statement by the insured in an application that does not become part of the policy is known as a ...

An untrue statement by the insured in an application that does not become part of the policy is known as a ...

• A. Misrepresentation
• B. Concealment
• C. Warranty
• D. Abandonment

Answer: (A)

Misrepresentation is a false statement of fact made in the insurance application. Even though that statement doesn’t become part of the policy’s terms, it can still affect the contract because the insurer uses truthful information to assess risk. If the misstatement is material—i.e., it would have influenced the insurer’s decision to issue the policy or set the premium—the policy can be voided or a claim denied. This differs from concealment, which is withholding required information, and from a warranty, which is a promise stated within the policy terms that must be true for coverage to apply. An example is stating you have never had a claim when you actually have; if material, this could jeopardize the policy.

Misrepresentation is a false statement of fact made in the insurance application. Even though that statement doesn’t become part of the policy’s terms, it can still affect the contract because the insurer uses truthful information to assess risk. If the misstatement is material—i.e., it would have influenced the insurer’s decision to issue the policy or set the premium—the policy can be voided or a claim denied. This differs from concealment, which is withholding required information, and from a warranty, which is a promise stated within the policy terms that must be true for coverage to apply. An example is stating you have never had a claim when you actually have; if material, this could jeopardize the policy.