The factual statements of the insured upon which an insurance policy is based are referred to as what?

The factual statements made by the insured that form the basis of an insurance policy are known as representations. These are the truthful statements provided by the applicant when applying for insurance coverage. Insurers rely on these representations to assess risk and decide whether to issue a policy as well as the terms of that policy.

Representations are significant because they must be true to the best knowledge of the insured. If a representation is found to be knowingly false or misleading, it can lead to claims being denied or policies being voided. This embraces the principle of utmost good faith (uberrima fides) within insurance contracts, where the insurer trusts that the insured has provided honest information regarding their risk profile.

While declarations usually refer to the particular details outlined in the insurance policy (like name, address, and coverage amounts), warranties involve promises that certain conditions will or will not occur. Affirmations typically refer to statements made to validate or confirm something and do not fit the context of the insured's initial factual statements. Thus, representations aptly capture the essence of the insured's statements that fundamentally underpin the issuance of an insurance policy.