Texas General Lines — Life, Accident, Health and HMOGeneral InsuranceEasy
An individual is applying for a life insurance policy and provides truthful information to the best of their knowledge. However, they unknowingly omit a minor detail about their medical history that would not materially affect the insurer's decision. What term best describes this situation?
- AInnocent misstatement
- BWarranty
- CMaterial fact
- DMisrepresentation
Show answer & explanationAnswer & explanation
Correct answer: A. Innocent misstatement
An innocent misstatement occurs when an applicant provides incorrect information without intent to deceive and the information is not material to the insurer's decision. This differs from misrepresentation, which can involve intent or materiality.
Why the other options are wrong
- B. A warranty is a statement guaranteed to be true, and a breach of warranty can void a policy.
- C. A material fact is information that would influence an insurer's decision; its omission, even innocent, could be problematic.
- D. Misrepresentation implies a false statement that is material or made with intent to deceive.
Innocent Misstatement
An unintentional error in information provided by an applicant that is not material to the insurer's underwriting decision.
- No intent to deceive.
- Information is not material.
- Typically does not void a policy.
Memory trick: Don't get 'stuck' on minor errors, if they're innocent and don't matter, it's just a misstatement.