What is the common consequence of material misrepresentation on an insurance application?

Material misrepresentation on an insurance application typically results in the policy becoming voidable by the insurer. This means that if the insurer discovers a material misrepresentation, they have the right to rescind or void the policy, as it can affect their underwriting decision. A material misrepresentation is a significant falsehood that might influence the insurer's decision to provide coverage or the terms of that coverage. Therefore, discovering such misrepresentation allows the insurer to protect themselves from potential losses that arise from providing insurance based on incorrect or incomplete information.

While immediate termination of the policy might occur in some serious cases, it’s important to note that insurers usually have the option to void the contract instead of terminating. Higher premiums could be an outcome of underwriting risk assessors evaluating the applicant’s profile accurately, although misrepresentation typically leads to more severe consequences than simply adjusting premiums. Eligibility for additional coverage is not a common result of misrepresentation; rather, the contract itself is put at risk due to the inaccuracies present in the application. Thus, the most accurate consequence of material misrepresentation is indeed that the policy becomes voidable by the insurer.