West Virginia Adjusters Practice Exam

Which of the following can lead to a policy being rescinded?

1. Change of address

2. Misrepresentation

3. New claim

4. Reviewing claims history

The correct answer is: Misrepresentation

A policy can be rescinded when there has been misrepresentation by the insured. Misrepresentation involves providing false information or failing to disclose relevant information when applying for insurance coverage. This could include exaggerating risks, failing to mention previous claims, or not disclosing current health conditions, for example. Insurers rely on the accuracy of the information provided to make underwriting decisions, and significant misrepresentations undermine that trust and can lead to the cancellation of the policy. In contrast, other options such as a change of address, a new claim, or reviewing claims history typically do not provide sufficient grounds for rescinding a policy. A change of address might require the insurer to adjust terms or premiums based on new risk assessments, but it doesn’t constitute a basis for rescission. Likewise, simply filing a new claim does not render the policy void; it is part of the normal operation of an insurance policy. Reviewing claims history is an ongoing process that insurers may conduct but does not directly relate to the rescission of a policy unless it uncovers misrepresentation or fraud.