Which of the following is a consequence of misrepresentation?

Misrepresentation in the context of insurance occurs when a policyholder provides false information or omits critical facts that can affect the insurer’s decision to provide coverage. When a misrepresentation is identified, one significant consequence is the potential issuance of unwarranted insurance coverage. This means that the insurer may have granted a policy based on incorrect information, essentially agreeing to cover risks that should not have been accepted had they known the complete and accurate facts.

This can lead to situations where the insurer might be financially liable for claims that should not have been covered, exposing them to undue risk and financial loss based on inherited falsehoods. It emphasizes the importance of accuracy and honesty in the application process, as a misrepresentation can skew the insurer's understanding of risk.

While increased premium rates, denial of all claims, and reassessment of policy limits can occur in certain contexts, these do not directly stem from the act of misrepresentation itself in the same way that unwarranted coverage does. Misrepresentation specifically creates a situation where coverage is undeserved based on provided information, thereby validating the choice made.