How does the insurance industry primarily view full disclosure on a proposal form?

The insurance industry views full disclosure on a proposal form as a critical requirement to avoid issues later. This expectation is rooted in the principle of utmost good faith, or "uberrima fides," which governs insurance contracts. Both the insurer and the insured have a responsibility to disclose all material information.

Material information is any fact that would influence the insurer's decision to provide coverage or determine the terms of that coverage. If an insured fails to fully disclose relevant information, it could lead to disputes regarding claims, potential policy cancellations, or even accusations of misrepresentation. Thus, ensuring that all pertinent details are accurately represented in the proposal form is vital for establishing a transparent relationship between the insurer and the insured, which helps mitigate risks of unforeseen complications in the future.

In contrast, considering full disclosure as optional or merely a legal formality underestimates its importance in maintaining the integrity of the insurance process. Similarly, the notion that it can be amended later diminishes the responsibility of the insured to provide complete and accurate information from the outset.