What action could an insurer take if an applicant fails to disclose previous claims?

An insurer has the right to decline an application if the applicant fails to disclose previous claims, as this is considered a material misrepresentation. Disclosure of prior claims is crucial in the underwriting process because it helps the insurer assess the risk associated with insuring that applicant. If the applicant intentionally withholds this information, it can affect the insurer's ability to accurately evaluate potential risk, leading to the decision to refuse coverage.

Failing to disclose previous claims may indicate a higher likelihood of future claims, raising the insurer's risk profile. Insurers rely on complete and truthful information to make informed underwriting decisions, and non-disclosure undermines that process. As a result, if an applicant neglects this duty, the insurer often opts to decline the application rather than take on unforeseen risks.