In the course of a claims investigation,the insurer discovers that the warehouse it covers has been used for dynamite storage for the last year. When the policy was first issued four years ago,the insurer agreed to cover it for clothing storage. What does the law typically allow the insurer to do in this situation?
A)Pay the claim in full.
B)Pay only a proportion of the claim
C)Deny the claim
D)Prosecute the insured for intentional misrepresentation

Question

Quizplus · Accepted Answer

The insurer can deny the claim as the policy was issued for clothing storage and not for storing dynamite. This is a misrepresentation by the insured and the insurance company is not obligated to pay for such a risk. It is important for the insured to provide truthful information while taking up an insurance policy.

In the Course of a Claims Investigation,the Insurer Discovers That