Maryland Property and Casualty Insurance Practice Test

Misrepresentation is presenting a false statement of a material fact that induces someone to enter into a contract. In a sales presentation, a producer who makes a statement that could mislead the applicant is conveying a false or misleading fact that the applicant might rely on when deciding to apply for or purchase insurance. The key idea is that the statement concerns something important (material) and has the potential to influence the applicant’s decision.

Duress involves coercion or threats to force an agreement, which is not what’s described here. Undue influence means improper pressure on someone, often a vulnerable party. Fraud requires deliberate deception to gain something of value; while the statement here is designed to mislead, the term used in this context for false statements that influence the contract is misrepresentation.