Non-Disclosure
The failure of an insurance applicant to reveal important information that could affect the insurer's decision to provide coverage or set premiums. Non-disclosure can result in policy cancellation or claim denial.
Example
“The insurance company denied Sarah's life insurance claim due to non-disclosure of her smoking habit on the application.”
Memory Tip
Think 'Don't Disclose, Lose Coverage' - failing to disclose can cost you your insurance protection.
Why It Matters
Insurance operates on the principle of utmost good faith, requiring full disclosure of relevant facts. Non-disclosure can void your policy when you need it most, leaving you financially exposed and potentially facing legal consequences.
Common Misconception
Many applicants think they only need to answer direct questions and can omit information not specifically asked about. However, insurance law generally requires disclosure of any material facts that could influence the insurer's decision, even if not directly questioned.
In Practice
John applies for health insurance and doesn't mention his occasional chest pains because he was never formally diagnosed with heart problems. Six months later, he has a heart attack resulting in $150,000 in medical bills. During claim investigation, the insurer discovers his pre-existing symptoms through medical records. They rescind his policy for non-disclosure, leaving John responsible for the entire $150,000 bill plus returning $2,400 in premiums he paid.
Etymology
From the prefix 'non-' meaning 'not' and 'disclosure' from the Latin 'dis-' (apart) and 'claudere' (to close), literally meaning 'to unclose' or reveal information.
Common Misspellings
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See Also
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