What is representation in insurance?

Representation in insurance refers to a factual statement made by an applicant for insurance, which the insurer relies on during the underwriting process. These representations are important because they help the underwriters assess the risk involved in insuring the applicant. When these statements are truthful and accurate, they provide a clear picture of the applicant's situation, which informs the insurer's decision about whether to offer coverage and at what premium.

In the context of underwriting, these factual statements might include information about the applicant's prior insurance history, claims experience, or details about the property being insured, such as its condition and usage. If the underwriter discovers that a significant misrepresentation has been made, this could potentially lead to a denial of coverage or a voiding of the policy.

While assumptions made during underwriting, a statement of financial status, and the terms of the policy agreement are all relevant to the insurance process, they do not encapsulate the specific role of representation, which focuses primarily on the accurate and factual disclosures offered by the applicant.