Question

Bob applies to City Insurance Company for insurance. City issues a policy, but later discovers that Bob's application includes several misstatements. Most likely, these misstatements can:

a. not bind Bob or affect the policy.
b. affect the coverage under the policy but cannot void the policy.
c. bind Bob but cannot affect the coverage.
d. void the policy.

Answer 1

Misstatements on an insurance application can most likely void the policy, as the accuracy of this information is crucial for the insurer to assess risk and determine policy terms. Option b.

Step-by-step explanation:

If Bob's application to City Insurance Company contains misstatements, the most likely consequence is that these misstatements can void the policy.

When applying for insurance, the applicant must provide truthful and accurate information for the insurer to properly assess the risk and determine appropriate premiums. Misrepresentation or nondisclosure of material facts by the insured can lead to the insurance contract being voided. This is because the insurer relies on the information provided to make an informed decision about the terms of the insurance policy. If this information is found to be false or misleading, it can constitute a breach of the contract.