Insurance Broker Certification Practice Exam

Which of the following terms relates to the statement made by an applicant that can affect the insurer's decision?

1. Waiver

2. Representation

3. Indemnification

4. Aggrievement

The correct answer is: Representation

The term that specifically relates to a statement made by an applicant that can influence the insurer's decision is representation. In the context of insurance, representation refers to the information provided by the applicant that outlines their risk profile and circumstances. This information is critical as it helps the insurer assess the risk they are taking on when issuing a policy. When an applicant fills out an insurance application, they make representations about relevant facts—such as their health, occupation, and prior claims. These statements are relied upon by the insurer to make underwriting decisions. If the representations are found to be inaccurate or misleading, it can lead to issues such as the denial of coverage or cancellation of the policy, depending on the severity and significance of the misrepresentation. The other terms listed, such as waiver, indemnification, and aggrievement, relate to different aspects of insurance and legal principles. Waiver involves the voluntary relinquishment of a right, indemnification refers to compensation for a loss or damage, and aggrievement deals with an individual’s ground for complaint. While they are important in the insurance realm, they do not directly correspond to the context of statements made by applicants affecting insurer decisions.