How is a representation defined in insurance terms?

In insurance, a representation is defined as a statement made by the applicant regarding their insurance application that they believe to be true based on their knowledge. This definition emphasizes the importance of the applicant's honest belief as they complete the application process. Representations are crucial because they can significantly influence an insurer's decision to underwrite a policy or determine the premium rates. By focusing on the concept of truth "to the best of one's knowledge," this definition highlights the notion that it is the accuracy and integrity of the information provided that matters, rather than requiring absolute certainty.

In contrast, the other options present concepts that do not accurately encapsulate the definition of representation in the insurance context. A sworn statement suggests a legal formality that is not characteristic of representation, while a written declaration implies a fixed format that is not mandatory for all representations. Additionally, a legal contract pertains to a binding agreement between parties, which is broader and distinct from the personal disclosures made during the application process.