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In: Finance

Explain 1) the consequence of the insured having a material misrepresentation on an insurance application, and...

Explain 1) the consequence of the insured having a material misrepresentation on an insurance application, and 2) the consequence for an insurance company of the insurance contract being a contract of adhesion.

Solutions

Expert Solution

1) Misrepresentation is getting into a contract with a person or a company on false grounds by making statements that are not in accordance with the facts. The consequence of the insured having a material misrepresentation on an insurance application gives insurance company a right to deny the claim or terminate the policy.

2) Insurance contracts are considered as the contracts of adhesion. This means that the applicant adheres to the terms of the contract decided by the insurer if he/she accepts the application. So, the consequence for an insurance company of the insurance contract being a contract of adhesion is that any confusing language in such contracts are interpreted in favor of the insured.

jeff jeffy answered 2 years ago
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