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Principles of Insurance Law and Regulation
Resource 1 . 6
9 minutes

RLLI Section 7

Seth J. Chandler

1. What is the purpose of paragraph 1 of this section?

2. Do you think the insurance industry needs extra legal motivation to investigate the applicant? Should the insured be able to get away with what some would term a half-truth: providing information that, if the insurer followed up, would show something material to risk or should the insured be obligated to be explicit about the issue? Suppose an insurer does not like the Restatement approach; is there anything it can do in its application process to avoid its impact?

3. Does the Restatement approach in Comment f make sense when sophisticated insureds are involved? Why might a rational insurer prefer a warranty to a representation and why might a rational insured prefer to provide one rather than a representation?

4. Paragraph 3 of this section says the insured gets its money back even if the misrepresentation is intentional. Do you think this is fair? What incentives does paragraph 3 create?

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