Audit And Assurance Practice Exam

What is a possible consequence of a serious relevant misrepresentation, subject to applicable law and policy terms?

The insurer must always pay double the claim The insured automatically becomes a reinsurer The policy converts into a benefit policy The insurer may have a remedy affecting the contract or claim

Correct Answer:

The insurer may have a remedy affecting the contract or claim

Explanation:

Material non-disclosure or misrepresentation can give the insurer contractual or legal remedies, the nature of which depends on the circumstances and applicable law.

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