Other Than Life (OTL) Practice Exam

What might cause an insurance policy to become void?

1. Claiming an insurance policy on expired coverage

2. Misrepresentation by the policyholder

3. Failing to notify the insurer about a change of address

4. None of the above

The correct answer is: Misrepresentation by the policyholder

A policy may become void due to misrepresentation by the policyholder because this fundamentally undermines the insurer's ability to assess risk accurately. Insurance policies are based on the principle of utmost good faith, which requires both parties to communicate all relevant information truthfully. If a policyholder provides misleading information—whether intentionally or unintentionally—it can lead to the policy being voided. This could occur at the time of application or during the life of the policy if the insurer discovers that the information the policyholder provided was not just incorrect, but significant enough to influence the insurer's decision to offer coverage or the terms of that coverage. In contrast, while claiming on an expired coverage might seem problematic, it typically reflects a misunderstanding of the policy status rather than a misrepresentation that would void the agreement. Additionally, failing to notify the insurer of a change of address, while it could potentially affect communication or claims processing, would not automatically void the policy unless it is explicitly stated in the terms and conditions as a requirement leading to voidance in cases of non-compliance.