Ace the Rhode Island Insurance Adjuster Exam 2026 – Unlock Your Claims Future with Confidence!

If an insured fails to disclose relevant information to their insurer, the policy may become void. This principle is rooted in the concept of utmost good faith, which requires both parties in an insurance contract to act honestly and disclose all material facts. Material facts are those that would influence the insurer's decision to underwrite the policy or set its terms.

When an insured omits or conceals significant information, it undermines the foundation of trust and transparency essential in the insurance relationship. As a result, insurers have the right to void a policy if they find that important information was misrepresented or not disclosed, which justifies their decision to deny coverage for claims arising under that policy. This means that if the insurer would not have issued the policy or would have charged a higher premium had the complete information been disclosed, the policy can be invalidated.

Therefore, the significant impact of failing to disclose pertinent information is the potential voiding of the insurance policy itself, which can leave the insured without coverage when it is needed the most.