General Insurance PrinciplesQuestion 172 of 215
A commercial applicant fails to disclose that he was non-renewed by two prior carriers for arson suspicions. Under California law, the failure to disclose this material fact is:
a.A breach of warranty that requires court approval to enforce
b.A representation that becomes binding only if repeated under oath
c.A concealment that entitles the insurer to rescind, even if unintentional
d.Not actionable unless the insurer can prove it was intentional fraud
Explanation
Under California Insurance Code §§330–334, concealment is the failure to communicate a material fact one knows and ought to communicate. The injured party (typically the insurer) is entitled to rescind the policy, whether or not the concealment was intentional. The insurer does not have to prove fraud to rescind based on concealment.
Law Reference: Cal. Ins. Code §§330–334 (concealment)Practice all 215 questions free — no signup required.
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