Misrepresentation

What makes a misrepresentation material? Why does materiality of a misrepresentation matter?

A misrepresentation is material "if the insurer would not have issued the policy had it known the facts misrepresented." Meah v. A. Aleem Constr., Inc., 105 A.D.3d 1017, 963 N.Y.S.2d 714 (Martinez, Leo 103). To put it plainly, a misrepresentation in an insurance context is a false statement made to the insurer to induce the acceptance of a contract. The misrepresentation can be a false affirmative statement or an omission that influences the insurer to assure the risk of coverage. In the Heinz case, the District Court found that Heinz intentionally made four material misrepresentations of fact about its loss history in its application. The Appeals Court goes on to explain that materiality of a misrepresentation matters because it's an issue that can ultimately lead to a rescission of an insurance policy if the insurer relied upon that material misrepresentation (Martinez, Leo 105). If the insurance company relies on an applicant's misrepresentation, it can cancel the contract. The insured will have no recourse and will be unable to file a claim against the policy. If the misrepresentation is not material, the insurance policy may still be enforced. In life insurance contracts, the materiality of a misrepresentation is defined narrowly, and only if misrepresentation contributed the contingency or event on which the policy can become payable (Martinez, Leo 109). 

Martinez,Leo,  Richmond,Douglas. Martinez and Richmond's Cases and Materials on Insurance Law,  8th Edition. West Academic Publishing.