What does a material fact refer to in insurance?

A material fact in insurance is a fact that would influence the insurer's decision regarding the issuance of a policy or the terms of coverage. Such facts are critical because they can directly affect the risk assessment the insurer performs when evaluating an application. Insurers rely on accurate and complete information to determine whether to offer coverage, what premiums to charge, and what conditions to include. If a material fact is not disclosed, it can lead to problems such as denial of a claim or cancellation of the policy.

In the context of this question, option C correctly identifies that a material fact significantly impacts the insurer's underwriting process. Insurers are obligated to consider material facts to accurately assess risks and ensure that their decisions are well-informed.