What does an insured tend to lose if they fail to disclose material facts?

If an insured fails to disclose material facts, they risk losing their indemnity benefits. In the context of insurance, material facts are those that could influence the insurer's decision to provide coverage or determine the terms of that coverage. When an insured does not fully disclose these facts, the insurer is at a disadvantage, as they cannot accurately assess the risks associated with insuring the individual.

The principle of utmost good faith, or "uberrima fides," obligates both parties in an insurance contract to disclose relevant information to each other. By not disclosing material facts, the insured may be deemed to have breached this duty, which can result in the insurer being able to void the policy or deny a claim.

In contrast, losing insurable interest, coverage of the policy, or legal rights to sue the insurer are less directly linked to the failure to disclose. Insurable interest must exist at the inception of the policy, but it is not necessarily affected by nondisclosure. Coverage pertains to what is provided in the policy itself, which may remain unless repudiated due to fraud or misrepresentation. Legal rights to sue typically stem from the policy agreement but can be affected by different aspects of the relationship between the insured and insurer, not solely through nondis