What is considered a "material misrepresentation" in an insurance policy?

A "material misrepresentation" in an insurance policy refers to providing false information that affects coverage. This concept is critical in the insurance industry because the accuracy of the information provided by the applicant influences the insurer's decision to issue a policy and the terms under which it is issued. If an applicant knowingly provides incorrect details about their risk profile, such as an inaccurate claim history or the status of a property, this can lead the insurer to underwrite the policy differently, or deny a claim if the truth comes to light later. The understanding is that truthful disclosure is essential for the insurer to assess the proper level of risk and set appropriate premiums.

In contrast, providing true information that affects coverage does not constitute a misrepresentation, as it aligns with the insured's obligation to disclose facts accurately. Failing to disclose minor details usually does not rise to the level of material misrepresentation, unless those details are deemed significant enough to change the risk assessment. Additionally, changing policy terms after signing pertains to contract modifications and does not directly relate to misrepresentation in the context of initial information disclosure.