Inaccurate or incomplete information that can affect underwriting and coverage.
Misrepresentation is inaccurate, incomplete, or misleading information given in connection with the insurance risk when that information matters to the insurer’s decision.
This term matters because insurance depends heavily on the facts used to price and accept the risk. If key facts are wrong, the insurer may argue that the contract was written or maintained on a false basis.
In Canadian insurance, misrepresentation is closely connected to utmost good faith, representation, disclosure duties, and material change in risk. The basic issue is not whether every answer was perfect in hindsight. The issue is whether the incorrect or incomplete information was significant enough to matter to underwriting, pricing, eligibility, or policy terms.
Misrepresentation can arise at different stages:
The consequences vary by line of business and wording. An insurer may respond by correcting terms, charging a different premium, restricting coverage, declining renewal, or disputing coverage if the misrepresentation is material and connected to the issue in dispute. The point is not that every innocent mistake destroys coverage, but that significant misinformation can have serious contractual consequences.
| Term | Main focus | Practical question |
|---|---|---|
| Representation | What was said about the risk | What facts did the insurer rely on? |
| Non-Disclosure | What was not revealed | Was an important fact omitted? |
| Misrepresentation | Whether the underwriting basis was materially wrong or misleading | Was the insurer induced to write or continue the file on a false basis? |
| Warranty | Whether a stricter contractual promise was kept | Was a required condition or safeguard maintained? |
A homeowner applying for coverage says the property is owner-occupied, but it is actually being used mainly as a short-term rental. If that occupancy fact would have changed the underwriting result, the inaccurate statement may amount to a material misrepresentation.
In practice, the file may then be analyzed in order: what the application for insurance asked, what the insured represented, whether something material was omitted, and whether the final contract included any stricter ongoing requirements.
Misrepresentation is not limited to deliberate fraud. A statement can create serious issues even if it was careless or incomplete rather than intentionally deceptive.
It is also wrong to assume the concept matters only after a claim. Misrepresentation affects the underwriting basis of the policy from the start and can surface at renewal or endorsement time as well.
Another common mistake is treating misrepresentation as identical to non-disclosure. They often overlap, but one emphasizes materially wrong or misleading information while the other emphasizes a material omission.
The practical consequence depends on the product, the wording, the materiality of the incorrect information, and the surrounding facts. Readers should not assume a single universal outcome for every Canadian policy.