When you buy an insurance policy—whether it’s for your home, car, business, or something else—there’s an important foundation to that agreement: honesty.
Two legal concepts you may not hear often, but that carry a lot of weight in how your policy works (or doesn’t), are misrepresentation and material change.
Here’s what they mean, how they can affect your coverage, and a few real-world examples to help you stay protected.
What is Misrepresentation?
A misrepresentation happens when you give false or incomplete information to your insurer—intentionally or accidentally—at the time of applying for insurance.
Why it matters: If your insurer finds out that you misrepresented key facts, they can void your policy from the start, meaning, it’s as if the policy never existed.
🔍 Example:
You apply for car insurance and say you’ve had no prior accidents in the last 5 years. In reality, you had a fender bender two years ago that you “didn’t think was a big deal.” Later, when you file a claim, the insurer pulls your driving record and finds out. They may deny your claim—and worse, void your entire policy.
What is Material Change?
A material change is any change in your situation that could increase the risk to the insurer after the policy starts—and that you don’t inform them about. Two ways to know if the insurer would consider it a “material change:”
- If the insurance company had known at the time of the application of this change, would they have written the business in the first place, or
- Would the change have resulted in an increase in premium.
If those considerations are applicable from the change, then it would likely be considered a material change.
Why it matters: If you don’t tell your insurer about a material change, they could deny a claim or cancel your policy, even if the change wasn’t intentional or malicious.
🔍 Example:
You run a small business and change your operations from landscaping only to also include snow removal. You don’t tell your insurer. One day, there’s a claim and you’ve damaged/injured someone or their property. When you make a claim, the insurer says, “This operation wasn’t disclosed on your application,” and denies coverage.
Another common example is installing a woodstove in your home to help with heating during the winter. Woodstoves, cookstoves, pellet stoves, and fireplace inserts are considered surchargeable items and must be inspected before they can be covered by your insurer. These appliances must be disclosed prior to use, as failure to do so could void your insurance policy.
How Courts Have Ruled
Courts in Canada (and elsewhere) have consistently upheld the right of insurers to void policies where misrepresentation or failure to disclose material changes have occurred. A few case-inspired examples:
- Health Insurance Denied: A person failed to disclose a previous cancer diagnosis on their application. When they made a claim for a different health issue, the insurer reviewed the application and voided the policy based on misrepresentation.
- Home Insurance Voided: A homeowner didn’t disclose that they were renting their basement to short-term tenants through Airbnb. After a flood, their claim was denied because the change in occupancy was considered a material change.
✅ How to Protect Yourself
- Be honest and thorough when filling out applications—even if something seems minor.
- Keep your broker informed if anything changes: a renovation, a new driver in the household, a business pivot, etc.
- Ask questions if you’re not sure whether something needs to be disclosed. It’s always better to over-communicate than under-report.
Final Thought
Insurance is built on trust. Misrepresentation and material change are two of the most common ways coverage can unintentionally fall apart—often at the worst possible time. If you’re ever in doubt, give us a call. We’re here to help you keep your coverage solid and your peace of mind intact.
Want us to review your current policies or changes in your business or personal life? Let’s chat—so you stay covered, no surprises.
Your team at Prairie Insurance.
Protecting what matters most.