What constitutes "material misrepresentation" in insurance underwriting?

Material misrepresentation in insurance underwriting occurs when an individual submits misleading information that significantly impacts the insurer's decision-making process regarding the policy. This can include inaccuracies or omissions in the application that could alter the terms, premium, or even the acceptance of coverage. If an insurer is misled about important facts, it may result in the policy being issued under conditions that are not reflective of the actual risk.

For example, if an applicant for property insurance fails to disclose prior claims or misrepresents the condition of the property, this information may be considered material because it directly influences the insurer's assessment of risk. Therefore, the insurer might offer a different price or refuse coverage altogether if they had been aware of the true circumstances.

In contrast, providing accurate information does not constitute misrepresentation. Failing to submit a claim does not involve any misleading information on the application itself. Additionally, requesting additional coverage after the policy has been approved does not inherently involve misrepresentation, as it typically involves changes to an existing agreement rather than a falsification of initial application terms.