Buying insurance for your car, home, business, or personal belongings is about more than paying a premium. It’s a legal contract between you and your insurer. Like any contract, both parties have obligations.
While most consumers focus on the protection insurance provides, many don’t realize how important the information they give to their insurer really is. Accuracy and honesty aren’t optional, they’re essential. That’s where misrepresentation comes into play.
What the IBC Code of Consumer Rights and Responsibilities Says
The Insurance Bureau of Canada (IBC) makes it clear that insurance is a two-way agreement. Insurers have responsibilities, but so do consumers.
- Providing accurate information when applying for insurance
- Updating their insurer when circumstances change
- Reporting facts fully and honestly when making a claim or responding to insurer questions
Failing to meet these responsibilities even unintentionally can lead to serious consequences.
What Is Misrepresentation?
Misrepresentation occurs when false, incomplete, or misleading information is given to an insurer. This can happen in several ways, including:
- Providing incorrect information on an insurance application
- Forgetting to disclose important facts, even by accident
- Failing to update information after changes occur
Misrepresentation doesn’t always involve deliberate deception. Many cases result from misunderstandings or honest mistakes. However, the impact can still be significant.
Why Misrepresentation Matters to You
Whether intentional or not, inaccurate information can directly affect your insurance coverage. Under Canadian insurance principles, if an insurer determines there has been a material misrepresentation, meaning the information was important to assessing the risk but was incorrect or not provided, they may:
- Deny a claim
- Cancel the policy
- Adjust coverage or premiums retroactively
For example, forgetting to disclose a previous claim or misunderstanding a question on an application can influence how an insurer evaluates risk. In more serious cases, policies have been voided entirely due to incomplete disclosure.
Protect Yourself: Practical Tips
You can reduce the risk of misrepresentation by taking these steps:
1. Read Your Policy Carefully
Your policy is a legal document. Understand what is covered and what isn’t. If something is unclear, ask your agent or broker for clarification.
2. Be Thorough and Truthful
Provide complete information when applying for insurance, even if a detail seems minor. If it could affect your risk, disclose it.
3. Update Changes Promptly
Life changes matter. Moving, renovating, starting a home business, or adding a driver can all affect your coverage. Inform your insurer as soon as changes occur.
4. Ask Questions
If you’re unsure how to answer a question on an application or claim form, ask for clarification. It’s your responsibility to understand what’s being asked and respond accurately.
Your Rights
While misrepresentation is a consumer responsibility, the IBC Code also protects your rights, including:
- The right to be informed – clear explanations of coverage and decisions
- The right to transparent claims handling – understanding why a claim is approved or denied
- The right to complaint resolution – access to processes that help resolve disputes
If you believe a claim decision was unfair or information was misinterpreted, there are formal channels available to help.
GIO is an independent body set up to help Canadians find a fair resolution to disputes with insurance providers. If your insurance provider is a GIO subscriber, you can find and read their complaint handling process on our website here.
If you have received a Final Position Letter from your insurance company and remain unsatisfied, you can bring your complaint to GIO for review here.
Final Takeaway
Insurance isn’t just about paying for peace of mind it’s about trust. Being honest and accurate in how you present your information helps protect your coverage when you need it most.
And if you’re ever unsure: ask, clarify, and document the answers. Your coverage and your peace of mind depend on it.
Photo: Vitaly Gariev