If material to the risk, what happens to a policy due to false representations?

When a policyholder makes false representations that are material to the risk, the insurance company has the right to void the policy. A material misrepresentation refers to information provided by the applicant that, if accurately disclosed, would have influenced the insurer's decision to issue the policy or the terms under which it was issued.

In insurance, the principle of utmost good faith requires both parties to act honestly and disclose pertinent information. If an insurer discovers that a policyholder has made statements that are false and significant enough to affect the underwriting process, it often results in the insurer declaring the policy null and void. This means the policy is treated as though it never existed, and any claims made under that policy would be denied.

This principle helps protect insurers from potential losses due to fraudulent or misleading information that could skew their risk assessments. Thus, the correct answer correctly reflects the insurer's course of action concerning the integrity of the insurance contract.