When is a misrepresentation on an insurance application considered fraud?

A misrepresentation on an insurance application is considered fraud when it is intentional and material. This definition hinges on two key aspects: intention and materiality.

Intentional misrepresentation implies that the applicant knowingly provided false information with the aim of deceiving the insurer. This kind of deliberate action is significant because it breaches the trust that is fundamental to the insurance contract. If an applicant purposely distorts facts—like their health status, claim history, or any relevant details—this indicates an intent to gain benefits under false pretenses.

Materiality refers to the importance of the misrepresented information in the context of the insurance policy. If the information knowingly provided could influence the insurance company's decision to issue the policy, or the terms of that policy, it is considered material. For instance, if an applicant hides a past significant health issue and the insurer would have viewed this information as a deal-breaker, this misrepresentation is both intentional and material, hence qualifying as fraud.

In contrast, misrepresentations that are minor and unintentional don't carry the same weight. In these cases, there may not be any fraudulent intent, and the inaccuracies are typically not significant enough to alter the insurer's decision-making process. Similarly, common knowledge does not establish fraud, as it