What is the primary risk associated with misrepresentation on an insurance application?

The primary risk associated with misrepresentation on an insurance application is that the insurer may deny coverage upon discovery. This means that if an applicant provides false or misleading information about their health, lifestyle, or other relevant details, the insurance company can void the policy or deny a claim if the truth is revealed later. This principle is grounded in the idea of "utmost good faith," where both the insurer and the insured are expected to provide accurate and honest information. Misrepresentation undermines this trust and can significantly affect the insurer’s ability to assess risk properly, ultimately leading to potential denial of coverage or claims.

The other options do not accurately capture the main consequence of misrepresentation. For instance, higher premiums may result from underwriting practices, but misrepresentation is more likely to lead to denial of coverage rather than a change in premium levels. Automatic renewal typically doesn't apply to misrepresented information; it's generally contingent on the policy's terms and conditions. Similarly, policy benefits being increased does not relate to misrepresentation and is not a typical consequence of providing false information on an application.