Non-Disclosure
The failure to reveal important information when applying for insurance coverage. This can include hiding medical conditions, previous claims, or other material facts that could affect the insurer's decision to provide coverage.
Example
“The insurance company denied John's claim, citing non-disclosure of his previous heart surgery on his life insurance application.”
Memory Tip
Think 'Don't hide, disclose' - hiding information is non-disclosure that can void your policy.
Why It Matters
Non-disclosure can void your insurance policy completely, leaving you without coverage when you need it most. Insurance contracts require honest disclosure because insurers base their risk assessment and premiums on the information you provide.
Common Misconception
Many people think minor omissions don't matter or that insurers will just adjust premiums if they discover undisclosed information later. In reality, material non-disclosure can completely void a policy, and insurers may refuse to pay claims even years after the policy was purchased.
In Practice
Maria applied for a $500,000 life insurance policy but didn't mention her smoking habit, saving $2,400 annually in premiums. When she died three years later, the insurance company investigated and discovered the non-disclosure. They denied the $500,000 death benefit to her family, returning only the $7,200 in premiums paid, leaving her beneficiaries with a $492,800 loss due to her failure to disclose her smoking.
Etymology
Derived from legal terminology where 'disclosure' means revealing information, with 'non-' indicating the absence of this revelation, particularly important in insurance contracts based on good faith.
Common Misspellings
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Related Terms
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See Also
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