Material Fact

May 19, 2008

Information or data supplied by the insured, the truth and accuracy of which the insurer relies on to make an underwriting decision. Three tests are applied when deciding if a fact is material or merely informational. A fact is material if:

• The underwriter would have made a different underwriting decision. For example, the decision was made to offer coverage, but if "X' had been known, coverage would not have been offered;
• The underwriter would have charged a different premium. The building is located in a protection class 7, not the 4 that was reported which will result in an increase in premium when corrected.
• The underwriter would have applied different terms and conditions. Theft coverage would have been excluded had the underwriter known that the alarm was recently disconnected.

Concealment or misrepresentation of a material fact by the insured (or the agent) will generally lead to the voidance of a policy.

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