Concealment

Example

“The insurance company denied the life insurance claim due to concealment, as the policyholder failed to disclose their diabetes diagnosis during the application process.”

Memory Tip

Concealment = 'Con-SEAL-ment' - imagine sealing away important facts that should be revealed to your insurer.

Why It Matters

Concealment can void your insurance policy entirely, leaving you without coverage when you need it most. Insurance companies rely on complete and honest information to assess risk and set appropriate premiums, so hiding material facts undermines the entire insurance contract.

Common Misconception

People often think that if the insurance company doesn't specifically ask about something, they don't need to volunteer the information. However, applicants have a duty to disclose all material facts that could affect the insurer's decision, even if not directly asked about them.

In Practice

Sarah applied for a $500,000 life insurance policy but failed to mention she had been treated for high blood pressure two years earlier. She paid premiums for three years, totaling $4,500. When she died in a car accident, the insurance company investigated and discovered the concealed medical history. Because high blood pressure is a material fact that affects mortality risk, the insurer voided the policy and returned only the $4,500 in premiums to her beneficiaries instead of paying the $500,000 death benefit.

Etymology

From Old French 'conceler' meaning 'to hide' or 'keep secret,' derived from Latin 'celare.' The legal concept developed alongside early insurance contracts in the 17th and 18th centuries.

Common Misspellings

Related Terms

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