Tennessee Insurance Practice Exam

Which of the following statements about representations or warranties is true?

1. False representations never affect a policy

2. If material to the risk, false representations will void a policy

3. All representations must be true for a policy to remain valid

4. Warranties are not applicable to life insurance policies

The correct answer is: If material to the risk, false representations will void a policy

The statement that false representations will void a policy if material to the risk is accurate because representations are statements made by the insured about their circumstances or characteristics when applying for insurance. A representation is material if it would influence the insurer's decision to accept the risk or determine the premium. If an insured provides false information that significantly alters the risk perception or insurability, the insurer may have grounds to void the policy. This principle underscores the importance of honesty in the insurance application process, as it ensures both parties are protected under the agreed terms. The other statements contain inaccuracies or misunderstandings about how representations and warranties function in insurance. For example, while it is true that false representations can influence policy validity, the assertion that all representations must be true is too stringent, as minor inaccuracies that do not materially affect the risk may not void a policy. Additionally, warranties are indeed relevant in life insurance, as they can impose specific conditions that must be met for a policy to remain effective, therefore making this statement incorrect.