Which of the following actions can the insurer take if the insured intentionally conceals or misrepresents a material fact concerning any coverage part?

1. Rescind the contract.
2. Charge a penalty fee.
3. Modify coverage.
4. Sue the insured.

Question

17-12-2023
Business

High School

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Which of the following actions can the insurer take if the insured intentionally conceals or misrepresents a material fact concerning any coverage part?

1. Rescind the contract.
2. Charge a penalty fee.
3. Modify coverage.
4. Sue the insured.

Answer :

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JyonesBliss JyonesBliss · Answer 1 · 2024-07-25T23:37:06-04:00

Final answer:

If the insured intentionally conceals or misrepresents a material fact, the insurer can rescind the contract. Option 1 is correct.

Explanation:

If the insured intentionally conceals or misrepresents a material fact concerning any coverage part, the insurer may (1) rescind the contract. This means that they can decide to cancel the policy as if it never existed due to the violation of the principle of utmost good faith. Rescission is based on the fundamental law of insurance, which notes that insurance is a way of sharing risk and all parties involved must operate in good faith.

However, the insurer is not typically able to charge a penalty fee, modify coverage, or sue the insured solely based on the insured's intentional concealment or misrepresentation. These actions may be possible in certain circumstances depending upon the specific provisions of the insurance contract and jurisdictional laws.

Insurance companies constantly fight against moral hazard- the behaviour of insured parties taking more risks because they are protected by insurance. They employ measures such as investigations to prevent insurance fraud and monitoring of insured's behaviours to reduce the effects of moral hazards.

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Which of the following actions can the insurer take if the insured intentionally conceals or misrepresents a material fact concerning any coverage part?1. Rescind the contract.2. Charge a penalty fee.3. Modify coverage.4. Sue the insured.

Answer :

Final answer:

Explanation:

Learn more about Insurance Misrepresentation here:

Other Questions

Which of the following actions can the insurer take if the insured intentionally conceals or misrepresents a material fact concerning any coverage part?

1. Rescind the contract.
2. Charge a penalty fee.
3. Modify coverage.
4. Sue the insured.