General Insurance PrinciplesQuestion 191 of 315
On her life insurance application Maria states she has never used tobacco. She had quit two years before applying and believed the answer was correct. Three years later she dies and the insurer learns she had smoked socially as a teenager. Maria's statement is BEST classified as a:
a.Warranty that justifies rescission
b.Concealment that voids the policy
c.Representation that, if immaterial, will not defeat the claim
d.Fraud that exposes her estate to criminal penalty
Explanation
A representation is a statement made to the best of one's knowledge. If it is not material to the risk, the insurer may not rescind. Warranties require strict truth, concealment requires intentional withholding, and fraud requires intent to deceive.
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