What is misrepresentation in the context of insurance?

In the context of insurance, misrepresentation refers to providing misleading or inaccurate information about policy benefits. This can occur when an agent or broker intentionally or unintentionally presents facts inaccurately, leading the client to form a misguided understanding of what the insurance policy covers. Misrepresentation can undermine trust in the insurance process, potentially cause financial harm to consumers, and may result in legal repercussions for agents if it leads to a claim denial based on misrepresentations made to the policyholder.

Providing accurate policy details, encouraging clients to purchase additional coverage, and disclosing all policy costs are practices that, when conducted correctly, contribute to transparency and informed decision-making. However, they do not reflect the act of misrepresentation, which specifically involves conveying false or misleading information.