Texas Property and Casualty License 2025 – 400 Free Practice Questions to Pass the Exam

Material misrepresentation is a type of false statement or omission that significantly affects the insurer's decision to issue a policy or to set the terms of that policy. When an applicant submits information that is inaccurate or misleading and that information is relevant to the conditions of coverage, it can lead the insurer to evaluate the risk differently, potentially resulting in the denial of coverage altogether.

For example, if someone applying for a homeowners insurance policy fails to disclose prior claims or a known history of damage to the property, this could be considered material. The insurer needs accurate information to assess risk accurately, and if the misrepresentation could have influenced their underwriting decision, they may refuse to issue the policy.

The other types of misrepresentation mentioned, such as technical, minor, or insignificant misrepresentations, typically do not have the same level of impact on an insurer's decision-making process. These may not alter the risk assessment to a degree that would prevent the issuance of a policy. Thus, material misrepresentation stands out as the critical factor that could lead to a denial of coverage.