Non-disclosure
What Does Non-disclosure Mean?
Non-disclosure refers to the failure to disclose a relevant fact when applying for an insurance policy. This breaches the principle of good faith, which is essential in insurance negotiations. If the insurer can prove non-disclosure by the insured, a claim may be denied.
Insuranceopedia Explains Non-disclosure
It is crucial for a person to answer all questions in an insurance application honestly. Failing to do so constitutes misrepresentation, which can lead to serious consequences: the contract may be voided, or any claim they make might be denied. Additionally, applicants are obligated to voluntarily disclose information relevant to the policy they intend to purchase.
For instance, if an applicant is seeking property insurance for their house, they must inform the insurer if the property is regularly used as a venue for sales meetings. The presence of non-residents increases the risk of potential damage to the house. Providing this information enables the insurer to assess the risks accurately and calculate the appropriate premium.
