Which of the following is NOT a possible result of a fraudulent misrepresentation?

The scenario of fraudulent misrepresentation in the context of insurance can have profound consequences. When an individual engages in fraudulent behavior, such as providing false information on an insurance application, it fundamentally undermines the trust and reliance that insurers place on the information provided by policyholders.

The first outcome mentioned, which involves policy enforcement on legitimate claims, is not a typical result of fraudulent misrepresentation. If fraud is identified, insurers often have grounds to deny coverage or to refuse payment on claims that might otherwise be legitimate. Thus, the presence of fraudulent activity generally means that the insurer is not bound to enforce a policy in a manner beneficial to the policyholder. This outcome underlines how significant and damaging fraudulent representations can be to both insurers and the integrity of the insurance process.

In contrast, the other outcomes are more directly associated with fraud. Denial of recovery is a common response, as cheating the system voids the contractual agreement between the insurer and the insured. Legal repercussions may arise for the insurer if they wrongly enforce a policy against a fraudulent claim, but they also have the right to pursue legal action against the party committing fraud. Finally, cancellation of the policy would often follow detection of fraudulent misrepresentation, as insurers aim to mitigate risk and prevent further losses.

Overall