North Carolina Adjuster Practice Exam

Oscar's action of claiming he does not smoke on his health insurance application is an example of what?

1. Insurance fraud

2. Misrepresentation

3. Negligence

4. Omission

The correct answer is: Misrepresentation

Oscar's claim of not smoking on his health insurance application represents misrepresentation because it involves providing false or misleading information regarding his health habits. Misrepresentation occurs when an individual gives incorrect details that could influence the insurer's decision to provide coverage or the terms of that coverage. In the context of health insurance, smoking has significant implications for both the insurer's risk assessment and the premiums charged. If Oscar smokes and fails to disclose this fact, he is essentially misrepresenting his health status to the insurer. This could result in claims being denied or adjustments to his policy based on the true risk associated with his smoking habit, thereby impacting the contractual relationship between the insured and the insurer. In contrast, the other terms have different meanings. Insurance fraud typically involves a deliberate attempt to deceive an insurer for personal gain. Negligence would require a failure to act with the appropriate level of care or skill, which doesn’t fit this situation. Omission would refer more specifically to failing to disclose information rather than actively providing false information, which is not the case when Oscar actively claims not to smoke. Thus, the best classification of Oscar's action is misrepresentation.