What distinguishes a material misrepresentation from a nonmaterial misrepresentation?

A material misrepresentation is a false statement that, if known to be false, would influence the decision of an insurer to issue a policy or the terms of that policy. Because it is significant enough to affect the insurance provider's decision-making process, a material misrepresentation can indeed void the contract. This means that if the insurer discovers that a key fact was misrepresented when the policy was issued, they may cancel the policy and deny any claims based on that misrepresentation.

In contrast, a nonmaterial misrepresentation does not affect the insurer's decision to provide coverage or the specific terms of the policy. These types of misrepresentations are considered minor and typically do not carry the same legal consequences as material misrepresentations. Since nonmaterial misrepresentations do not influence the underwriting decisions, they are less likely to result in the voiding of a contract.

By distinguishing between these two types of misrepresentations and their implications on the validity of an insurance contract, it becomes clear why the correct choice emphasizes that a material misrepresentation has the capacity to void the contract.