CMFAS BCP Insurance Documents question: representation to avoid a contract

CMFAS BCPInsurance Documents

For an insurer to rely on a false representation to avoid a contract, what must generally be shown?

A Only that the statement was untrue, whether or not it mattered
B That the statement was a continuing warranty
C That the statement was written into the schedule
D That the statement was material and induced the contract

Show the answer and explanation

Answer: D. That the statement was material and induced the contract

Unlike a warranty (which must simply be complied with regardless of materiality), a representation only affects the contract if it was material and actually induced the insurer to contract. Mere untruth alone is not enough for a representation.

Common mistake

A representation requires materiality and inducement; a warranty does not — this is the crucial difference.

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CMFAS BCP Insurance Documents question: representation to avoid a contract

Answer: D. That the statement was material and induced the contract

Common mistake

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CMFAS BCP Insurance Documents question: representation to avoid a contract

Answer: D. That the statement was material and induced the contract

Common mistake

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