It is important to be truthful when applying for insurance. Being truthful means (a) not to misrepresent a material fact and (b) not to omit a material fact that is otherwise pertinent to the insurance underwriting process. Affirmatively making a misrepresentation, or omitting a material fact, will give the insurer an argument that coverage should be void based on the untruthfulness (fraud or concealment). Indeed, some policies even contain language that reflects that the policy will be void based on a misrepresentation or concealment of a material fact. Don’t let this happen to you by unnecessarily failing to disclose pertinent facts applicable to your business when applying for insurance (any kind of insurance) / during the insurance underwriting process.
For example, in a recent case, an insured was seeking an excess liability policy that would serve as excess automobile liability insurance. When applying for insurance, the insured failed to identify his son as living with him and a potential driver of his vehicles. The son had a drug abuse history, and after the excess policy was issued, was involved in a car accident that caused a fatality. The appellate court held that because the insured failed to identify his son in the application process, this served as the concealment of a material fact because had the son—a high risk driver—been identified, the insured either would have gotten a different insurance premium rate or the policy would not have been issued. See Privilege Underwrites Reciprocal Exchange v. Clark, Fla. L. Weekly D1810a (Fla. 5th DCA 2015).
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