What is the penalty for making false statements in applications for insurance?

• A. Class 2 Misdemeanor
• B. Class 1 Misdemeanor
• C. Felony
• D. Civil penalty only

Answer: (B)

The key idea here is that misrepresentation on an insurance application is treated as criminal fraud, not just a civil matter. When someone knowingly provides false statements to obtain insurance, the law can impose a criminal penalty rather than only a monetary-penalty consequence.

In North Carolina, making false statements in applications for insurance is classified as a Class 1 misdemeanor. That classification places the offense on the criminal side of the ledger—not a civil penalty—and is more serious than a simple fine but not a felony. A Class 1 misdemeanor can bring jail time and/or fines, reflecting that turning in false information undermines the integrity of the underwriting process and the insurance system as a whole.

That’s why the best answer is that the penalty is a Class 1 misdemeanor: it captures the criminal consequence appropriate for false statements in an insurance application. The options of a civil penalty only would miss the criminal aspect, and a felony would be reserved for more serious or repeat offenses. A Class 2 misdemeanor would be a lesser penalty than what the statute assigns for this behavior.