An insurance contract may be voided if a misrepresentation on the application is determined to be?

• A. Aleatory
• B. Material
• C. Intentional
• D. Conditional

Answer: (B)

The concept being tested is material misrepresentation. In insurance underwriting, a misrepresentation on the application is considered material if it would have influenced the insurer’s decision to issue the policy, the coverage offered, or the premium. When a misrepresentation is material, the contract may be voided because the policy was entered into based on false information that affects the risk the insurer accepted. This means the key factor isn’t whether the misstatement was intentional, but whether it would have changed the underwriting decision. For example, falsely claiming no health problems or no smoking on a life insurance application is typically material because it would alter the risk assessment and pricing. If the misrepresentation is not material, the contract usually isn’t voided solely on that misstatement. The other terms don’t fit the concept: aleatory describes a type of contract based on uncertain events, not misrepresentation; intentional speaks to the maker’s intent but misrepresentation can be material even if not intentional; and conditional isn’t relevant to misrepresentation.