A producer offers a prospective insured an auto policy that contains deductibles but tells the prospect that it contains no deductibles. In this situation, the producer may be found guilty of

• A. Fraud
• B. Concealment
• C. Misrepresentation
• D. Coercion

Answer: (C)

Misrepresentation is presenting a false statement of a material fact to influence someone to enter into a contract. If a producer tells a prospective insured that the auto policy has no deductibles when the policy actually includes them, that falsely describes a major policy term and is intended to persuade the buyer to purchase under incorrect terms. Coercion involves threats, which aren’t present here. Concealment would be hiding a material fact, whereas this is an affirmative false statement. While fraud can involve deception to gain, the situation most directly illustrates misrepresentation—the false claim about a policy feature designed to induce the sale.