In insurance terms, which term describes a false statement made?

In insurance terms, which term describes a false statement made?

• A. Concealment
• B. Mispresentation
• C. Warranty
• D. Adverse selection

Answer: (B)

Misrepresentation is the act of making a false statement about a material fact to the insurer. The key idea is that the statement is not true and it matters to the insurer’s decision to issue the policy or set the premium. This is different from concealment, which is simply withholding a known material fact. It’s also distinct from a warranty, which is a promise that certain facts are true and can be grounds to void the policy if breached. And adverse selection is about high-risk individuals being more likely to buy insurance, not about false statements. So a false statement made to influence underwriting or pricing is misrepresentation.

Misrepresentation is the act of making a false statement about a material fact to the insurer. The key idea is that the statement is not true and it matters to the insurer’s decision to issue the policy or set the premium. This is different from concealment, which is simply withholding a known material fact. It’s also distinct from a warranty, which is a promise that certain facts are true and can be grounds to void the policy if breached. And adverse selection is about high-risk individuals being more likely to buy insurance, not about false statements. So a false statement made to influence underwriting or pricing is misrepresentation.