The failure of the insured to reveal relevant facts known to the insured in applying for insurance is called ...

• A. Concealment
• B. Misrepresentation
• C. Warranty
• D. Direct Loss

Answer: (A)

In insurance, the insured must disclose all material facts known to them when applying for coverage. Failing to reveal relevant information is concealment. This withholding is significant because the contract is entered into under utmost good faith, and the insurer relies on full disclosure to assess risk. When concealment is material, it can allow the insurer to void or rescind the policy or deny a claim, since the policy was issued based on incomplete information.

Concealment differs from misrepresentation, which involves making a false statement—whether knowingly or not—that influences the insurer’s decision to issue the policy. A warranty, on the other hand, is a promise within the policy itself; breaching a warranty is a separate basis for denial or cancellation. Direct loss refers simply to the actual amount of damage, not to the disclosure of information.