What term describes incorrect information that affects the terms of the insurance contract?

The term that describes incorrect information affecting the terms of an insurance contract is misrepresentation. In the context of insurance, misrepresentation occurs when one party provides false or misleading information during the application process or in any communication regarding the insurance policy. This can include overstating a property's value, failing to disclose prior claims, or providing incorrect details about a property’s condition.

Misrepresentation is significant because it can lead to claims being denied or the policy being voided, as the insurer relies on the accuracy of the information provided to assess risk and set terms for coverage. Any inaccuracies can undermine the trust necessary for the insurance contract to function properly.

While terms like concealment and fraud may also relate to false information, they carry specific legal connotations. Concealment refers to the deliberate withholding of important information, while fraud involves intentional deception for personal gain. Estoppel is a legal principle that prevents a party from arguing something contrary to a claim made or implied by their previous statements or actions.

By understanding these distinctions, one can appreciate why misrepresentation is the correct term in this context, as it directly pertains to incorrect information that influences the establishment of the insurance contract's terms.