What prevents recovery under an insurance policy despite misrepresentations?

The correct answer highlights that recovery under an insurance policy can be prevented if misrepresentations are both fraudulent and material. In insurance terms, a misrepresentation is considered material when it significantly affects the insurer's decision to provide coverage or the terms of that coverage. When a misrepresentation is deemed fraudulent, it implies intentional deception by the insured, which can undermine the trust necessary for contractual agreements.

Insurance contracts rely on the principle of utmost good faith, meaning that both parties must act honestly and disclose pertinent information. If a misrepresentation is found to be both fraudulent and material, the insurer may have grounds to deny a claim or void the policy altogether because the trust fundamental to the insurance contract has been violated.

Other options, such as clerical errors, misunderstandings about the insured item, or simple omissions in paperwork, do not rise to the level of fraud or material misrepresentation. These issues often either can be rectified or do not significantly alter the risk assessment for the insurer, thereby failing to provide enough basis for denying recovery under the policy.