BY SOLO INSURANCE®

Material misrepresentation is a scary term in the car insurance industry. Ever heard the phrase? Hopefully not! It means someone provided inaccurate or incomplete information that affects the premium or coverage on their car insurance application. Specifically, the misinformation provided could change the terms of the policy if the insurance company knew the truth. It could also prompt them to deny your claim.

Material Misrepresentation Examples

What are examples of material misrepresentation? Remember, they’re untruths or omitted information that could make a difference to the auto insurance company’s underwriting. For example:

• Not disclosing driving history or vehicle modifications
• Not revealing the fact that one drives for a transportation network or delivery service
• Using a different address other than where one lives or having vehicles kept at different addresses.
• Leaving out other drivers in the household or even other drivers of the vehicle

Here is another example for those who want some “legalese.” According to state of Missouri statutes: “a person commits a ‘fraudulent insurance act’ if such person knowingly presents, causes to be presented, or prepares with knowledge or belief that it will be presented, to or by an insurer, purported insurer, broker, or any agent thereof, any oral or written statement including computer generated documents as part of, or in support of, an application for the issuance of, or the rating of, an insurance policy….”  (*Section 375.991 Fraudulent insurance act…)

To recap, what is a material misrepresentation in a car insurance contract? A false statement or omission of a significant fact made on the application that, if known, would have caused the insurer to deny coverage or charge a higher premium.

Should you care about your answers to an insurance company?

You should. Is material misrepresentation really a big deal? YES! It is fraudulent. Seriously, it could mean your auto insurance company denies your claim after an accident, even if you weren’t at fault (or worse). Tell the whole truth when getting a car insurance quote or policy to avoid other potential issues. This is true for all types of insurance contracts. In worse cases, legal battles, lawsuits, or even criminal penalties could happen if you don’t.

Whether it goes that far or not, car insurance companies could simply void or rescind a policy too. There are rules insurance companies follow; yet, this goes on your history as canceled for material misrepresentation. Other auto insurance companies could then find you don’t meet their underwriting guidelines because of this. Being considered an “unacceptable risk” makes it hard to get the best rates. Even so, why would you want to go through the hassle of all this?

Best practice

Avoid issues by always disclosing correct answers to your car insurance agent for quotes and application questions.

Reference: * revisor.mo.gov

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