What term describes a false statement made on an insurance application that influences the insurer's decision?

The term that describes a false statement made on an insurance application that influences the insurer's decision is "material misrepresentation." In the context of insurance, a material misrepresentation occurs when an applicant provides information that is false or misleading and that information is significant enough that it would have affected the insurer's evaluation of the risk.

When an application contains such misrepresentations, insurers may rely on that incorrect information to underwrite the policy and determine premiums. If the insurer discovers the falsehood after the policy is issued, it may have grounds to rescind the policy or deny a claim. Material misrepresentation can significantly undermine the trust that is foundational to the insurance process, as the contract is based on the accuracy of the information provided.

The other terms listed do not capture the essence of this concept as accurately. For instance, "substandard representation" refers more to a quality of an applicant that does not meet standard underwriting guidelines but does not specifically address falsehoods. "Unacceptable risk" typically relates to a scenario where the insurer decides the risk is too high, and "adverse selection" pertains to the phenomenon where individuals with higher risks are more likely to seek insurance, rather than the specific falsehood in the application itself.