Misrepresentation

Example

“The life insurance company voided the policy after discovering the applicant's misrepresentation about their smoking history on the application.”

Memory Tip

Think 'MIS-represent' - you MISsed representing the truth, which can MISs up your coverage.

Why It Matters

Even seemingly minor misrepresentations can result in denied claims or cancelled policies when you need coverage most, potentially leaving you financially vulnerable. Insurance companies rely on accurate information to assess risk and price policies fairly, making honest disclosure essential for valid coverage.

Common Misconception

Many people think only intentional lies count as misrepresentation, but innocent mistakes or omissions can also void coverage if they're material to the risk being insured. Another misconception is that insurance companies can't investigate claims after issuing a policy, when they actually have the right to verify application information when processing claims.

In Practice

When applying for disability insurance, Mike reported his annual income as $75,000 but actually earned $65,000, hoping to qualify for higher benefit amounts. Two years later, when filing a claim for a back injury, the insurance company discovered the income discrepancy during their investigation. Because the misrepresentation was material to the coverage amount and premium calculation, the insurer reduced Mike's monthly benefits from $4,500 to $3,900 (reflecting his actual income) and required him to repay $14,400 in overpaid benefits from the claim period.

Etymology

From Latin 'mis-' (wrongly) and 'repraesentare' (to present again), the term entered insurance law in the 18th century as policies became more standardized and required accurate applicant information.

Common Misspellings

Related Terms

More in insurance

Other insurance terms you should know

See Also