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Misrepresentation

Misrepresentation occurs when false, incomplete, or misleading information is provided to an insurance company, either intentionally or unintentionally, during the application process or while a policy is active. It can involve misstating or omitting facts related to medical history, lifestyle, occupation, or any other information that could influence the insurer’s decision to issue coverage or determine premiums.

In insurance law, misrepresentation is considered a serious matter because it undermines the insurer’s ability to accurately assess risk. If a misrepresentation is discovered, the insurer may deny a claim, cancel the policy, or declare it void from the start (void ab initio). The severity of the consequences depends on whether the misrepresentation was innocent, negligent, or fraudulent.

Example:

If an applicant fails to disclose that they smoke when applying for life insurance, and later dies from a smoking-related illness, the insurer may deny the death benefit due to material misrepresentation.

What to Watch For:

Always provide complete and truthful information on all insurance applications and renewal forms. If you are unsure whether a detail is relevant, disclose it and let the insurer decide. Review your policy documents after approval to ensure that all recorded information matches what you submitted. Even unintentional omissions can affect claim eligibility if they are deemed material to the risk assessment.

Related Terms

Member

A member is an individual who is enrolled and covered under a group insurance plan, typically through their employer, association, or organization. The member is often referred to as the insured employee or plan participant and receives coverage for benefits such as health, dental, life, and disability insurance. The member may also extend coverage to eligible dependents, such as a spouse or children, under the same plan.

Contestability

Contestability refers to the period of time after an insurance policy is issued during which the insurer has the right to review and investigate the accuracy of the information provided in the application. If the insurer discovers that any information was omitted, misstated, or misrepresented during this period, it can deny a claim or void the policy.

Plan Member

A plan member is an individual who is enrolled in and eligible to receive benefits under a group insurance plan. Typically, the plan member is an employee of a company or a member of an organization that sponsors the group policy. The plan member is covered for the benefits outlined in the plan - such as health, dental, life, and disability insurance - and may also extend coverage to eligible dependents, including a spouse or children.

Policy (Contract)

A policy, also referred to as a contract, is the legally binding agreement between an insurance company (the insurer) and the policyholder that defines the terms, conditions, and obligations of coverage. It outlines what is insured, the benefits provided, the premium amount, exclusions, and the responsibilities of both parties. Once the insurer accepts the application and the first premium is paid, the policy becomes active and enforceable.

Insurer

An insurer is the insurance company or organization that provides financial protection to individuals or groups in exchange for premium payments. The insurer assumes the risk of potential loss and agrees to pay benefits for covered claims according to the terms of the policy. Insurers evaluate applications, determine premiums, issue policies, and manage claims through underwriting and administration processes.

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