A false statement of a material fact on which the insured relies is called what?

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Study for the Chartered Property Casualty Underwriter 530 Exam with flashcards and multiple choice questions. Each question has hints and explanations to enhance your understanding and prepare you thoroughly.

Multiple Choice

A false statement of a material fact on which the insured relies is called what?

Explanation:
Misrepresentation. In insurance, it’s a false statement about a material fact that the insurer relies on when underwriting. If the applicant’s misstatement would have changed the insurer’s decision or terms, and the insurer did rely on it to issue the policy, the contract can be affected (often voidable from the start). The other terms don’t describe a false, relied-upon statement: a binder is temporary coverage; the incontestable clause and the contestable period deal with time limits for challenging coverage, not with misstatements.

Misrepresentation. In insurance, it’s a false statement about a material fact that the insurer relies on when underwriting. If the applicant’s misstatement would have changed the insurer’s decision or terms, and the insurer did rely on it to issue the policy, the contract can be affected (often voidable from the start). The other terms don’t describe a false, relied-upon statement: a binder is temporary coverage; the incontestable clause and the contestable period deal with time limits for challenging coverage, not with misstatements.

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