Insurance premiums are calculated based on different risk factors, some specific to each person applying for insurance. When an insurance company assesses a potential client’s risk profile, they depend on complete disclosure of all important information.
A material fact is something that could affect the insurance company’s decision-making process regarding the risk posed by a potential client and the premium they should pay. This could include past claims or losses. If you don’t share these crucial facts and the insurance company makes decisions based on incomplete information, they might cancel the policy, treating it as if it never existed.
They would return the premiums to you and refuse your claim. It is extremely important for those applying for insurance to provide all necessary information about any past claims or losses, even if you didn’t claim a loss previously. Financial service providers also have a duty to ensure clients understand this and provide all relevant information accurately.