What are representations in the context of insurance contracts?

Representations in the context of insurance contracts refer to statements that the insured provides to the insurer, which are believed to be true to the best of their knowledge at the time the statements are made. These statements can pertain to facts about the insured's condition, financial situation, or other relevant information. While these representations are crucial in the underwriting process and can influence the insurer's decision to issue a policy or determine the premium, they are not considered legally binding in the same way that formal terms of the contract are.

If any inaccuracies are found in the representations, the insurer may have grounds for rescission of the policy, but only if the insurer can demonstrate that the misrepresentation was material to the risk accepted. It's important to note that, unlike written clauses which are explicitly part of the insurance contract, representations are typically verbal or informal disclosures made before or during the application process. Understanding this helps clarify the role that these statements play in the overall insurance agreement and the obligations of both the insurer and the insured.