New Hampshire Insurance Licensing Practice Exam

Material misrepresentation refers to misleading or false information provided during the insurance application process that would have a significant impact on the insurer's decision to issue a policy or determine the terms of coverage. When an applicant provides information that changes the nature of the risk for the insurer or would lead the insurer to make a different decision, it is deemed material because it influences the underwriting process and the conditions under which coverage is granted. Such misrepresentation could relate to vital aspects such as health status, prior claims history, or existing conditions, all of which are critical in assessing risk.

Options that discuss inaccuracies that do not affect the decision-making process, honest mistakes, or truthful statements do not address the core concept of material misrepresentation, which specifically hinges on the ability of the false information to change the outcome of the insurance transaction. Therefore, the focus on the significant impact on the insurer’s decision is what precisely defines material misrepresentation in the context of insurance.