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Principles of Insurance Law and Regulation
Resource 1 . 7
7 minutes

RLLI Section 8

Seth J. Chandler

1. What if reasonable insurers might disagree on whether the misrepresentation was material? Does the Restatement allow for that possibility or does it assume that all reasonable insurers would agree? Do you think it is true that all reasonable insurers would always agree on whether a particular representation was material? Does the language in the comments about "a reasonable insurer in this insurer's position" help clarify the issue?

2. Why should materiality matter? Why shouldn't an insurer be able to rescind a policy or have a lesser remedy such as premium offset even if the representation is not material? Does the Restatement rule encourage lots of small lies that, taken individually are not material, but taken collectively are?

3. Do you agree with the outcome in Illustration 2? What will insurers do in the future when an applicant says "two miles" in response to a question about how far they drive? Is that consequence fair and/or efficient?

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