Which statement best defines misrepresentation in insurance?

• A. A true or harmless statement of fact used to obtain coverage.
• B. A minor omission that has no effect.
• C. A false or misleading statement of fact used to obtain coverage; it may render the contract void or deny a claim.
• D. An opinion about a risk.

Answer: (C)

Misrepresentation in insurance means giving a false or misleading statement of fact that is used to obtain coverage. This hinges on a fact that matters to the insurer’s risk assessment—the material information about the insured or the insured item. Because the insurer relies on these facts to underwrite and price the policy, a false or misleading statement can give the insurer the right to void the contract from the start or deny a claim if the misrepresentation is discovered. It’s not about opinions or about statements that turn out to be true, and it isn’t about an immaterial omission with no impact. For example, stating you are a non-smoker when you actually smoke is a misrepresentation that could lead to cancelation of the policy or denial of a claim.