When would a misrepresentation on an insurance application be considered fraud?

A misrepresentation on an insurance application is deemed fraud when it is intentional and material. Intentionality indicates that the applicant knowingly provided false information with the intention to deceive the insurer. The materiality of the misrepresentation means that the false information is significant enough that it would influence the insurer's decision regarding the application or the terms of the policy.

For example, if an individual intentionally falsifies their health history to obtain a life insurance policy, and this information is critical for the insurer to assess risk, this qualifies as fraud. Insurance companies rely heavily on the accuracy of application data to determine eligibility and pricing. If the misrepresentation significantly alters the risk assessment, it can lead the insurer to underwrite a policy that wouldn’t have been issued had the truth been known.

Understanding these criteria helps to clarify why mere unintentional misrepresentations or those involving unimportant details do not rise to the level of fraud, as they do not carry the same implications for risk assessment and decision-making in the insurance context.