Updated: 11 March 2024

What Does Non-disclosure Mean?

Non-disclosure means failure to divulge a relevant fact when applying for an insurance policy. This is a violation of the principle of good faith which should be observed in insurance negotiations. A claim might not be awarded if the insurer has proof of an insured’s non-disclosure.

Insuranceopedia Explains Non-disclosure

It is important that a person answers the questions in an insurance application honestly. If they don’t, they are guilty of misrepresentation and the consequence might be the following: the contract can either be voided or their claim may be denied. Their other obligation is to voluntarily offer information which is relevant to the policy that they wish to buy. That is disclosure.

For example, an applicant who wants to get a property insurance for their house should tell the insurer that it regularly functions as a venue for a sales meeting. The presence of people other than the residents will make the insurer aware of the potential damage it might cause the house. The insurer can also then assess the risks right away and properly calculate the cost of the premium.

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