Michael has purchased a homeowner's (HO) policy from Acme insurance company. When Michael purchased the policy it was written as Michael's primary residence. Three months later Michael files a claim for damage to the property. In the process of the investigation the insurer found that Michael has been using the home as a rental property. When asked Michael said that he thought the policy was written as a rental policy and got very upset because he believed that the insurer did not want to pay the claim. Is this a case of material misrepresentation? If so what steps should the insurer take next? Pay the claim and act as though nothing has happened? Rescind (void) the policy and reimburse Michael his 3 months of premium? Or pay the claim and reevaluate Michael's policy and charge the correct premium? Defend your position. Representations are not part of the contract but are must prove that you intended to deceive the coly an inducement to the contract. A representation that is false is called a misrepresenta- if relicd on by the insurer, also makes the contes tion. The legal significance of a misrepresentation is voidable. An innocent misrepresentation is one sentation in issuing the policy at a specified premium. proof of loss or misrepresents the value of the in damaged, the insurer has the right to void the cher For example, Joseph applies for life insurance and states in the application that he has not visited a doc- tor within the last five years. However, six months payment of a claim. For example, assume that you rine insurer must prove two things: (1) the conceli. are asked if you have high blood pressure when you fact was known by the insured to be material, arifits apply for health insurance, and you answer "no" to the insured intended to defraud the insures" the question. If the insurer later discovers you have example, Joseph DeBellis applied for a life insurate high blood pressure, to deny payment of a claim, it policy on his life. He had an extensive criminal rwantil