In which scenario would an insurer likely deny a claim?

In scenarios involving insurance claims, a material misrepresentation refers to providing false information that could influence an insurer's decision regarding coverage or the premium charged. If an applicant misrepresents a material fact, the insurer has grounds to deny a claim because the misinformation affects the risk assessment process. For example, if an applicant fails to disclose a prior claim or provides an incorrect driver's history, this could have been pivotal in the insurer's decision to issue the policy or determine the terms of coverage.

In contrast, while misstatements about age and under-reporting liability limits can lead to complications, they do not carry the same weight as a misrepresentation of a material fact, which can alter the risk profile significantly. Similarly, having multiple prior claims may raise a red flag but does not automatically invalidate a claim. However, when a material fact is misrepresented, it fundamentally undermines the contractual trust required in the insurance relationship, leading to potential denial of coverage.