What is a representation in the context of insurance applications?

In the context of insurance applications, a representation refers to the beliefs or statements made by the applicant that they consider to be true. These representations are important because they provide insurers with information about the risk they are taking on. The distinction here is that representations are not guaranteed to be true; rather, they reflect the applicant's understanding and belief about their situation or the facts they provide.

For instance, if an applicant states that they have not had any significant health issues, that belief may be accurate based on their understanding, but it is not a guarantee. If later it is found that the applicant was not truthful, it might affect the policy, but representations themselves are not legally binding in the same way a warranty or guaranteed statement would be.

In essence, the significance of a representation lies in its role in assessing risk and underwriting. Insurers rely on these statements to evaluate whether to issue a policy and at what premium.