In the context of insurance, what does "misrepresentation" refer to?

Misrepresentation in the context of insurance is primarily defined as providing false information to induce the purchase of a policy. This involves either deliberate falsification or the provision of inaccurate details that may lead an insurer to conclude that the insured is a lower risk than they actually are. This practice is unethical because it undermines the trust between the insurer and the insured and can affect the fairness of the underwriting process.

When misrepresentation occurs, it can have serious consequences, including the denial of claims or cancellation of the policy. It emphasizes the importance of honesty and transparency in the insurance application process, as insurers rely on accurate information to assess risk and price policies appropriately. This concept is foundational in maintaining ethical standards within the insurance industry, ensuring that both parties are informed and protected.