AD Banker Comprehensive Practice Exam

Statements made on the application that are considered true to the best of the applicant's knowledge are known as:

1. Concealments

2. Representations

3. Waivers

4. Warranties

The correct answer is: Representations

The correct answer is representations. In the context of an insurance application, representations are statements made by the applicant that they believe to be true based on their knowledge at the time of completing the application. This means that the applicant is providing information they honestly believe to be accurate, which helps the insurer assess risk and determine coverage. Representations differ from warranties, which are guarantees that certain facts are true and must be strictly adhered to. If a warranty turns out to be false, it can lead to a denial of coverage. Concealments refer to the intentional omission of information that is material to the risk being insured, which can also affect the validity of a policy if discovered. Waivers, on the other hand, involve the voluntary relinquishment of a known right, which does not apply to the situation of providing truthful information on an application. This distinction helps clarify why representations are the correct terminology to describe the statements made by the applicant that they believe to be true.