What obligation does an insured have regarding material information?

The obligation of an insured to disclose all material circumstances related to the policy is grounded in the principle of utmost good faith (uberrima fides) that governs insurance contracts. This principle requires the insured to provide complete and accurate information to the insurer at the time of application. Material circumstances are those facts that would influence an insurer's decision to underwrite the risk and determine the premium.

When an insured discloses all material circumstances, they help ensure that the insurer has a full understanding of the risk being underwritten. This transparency reduces the likelihood of disputes over claims later on, as the insurer has made its decisions based on a comprehensive view of the risk involved.

By fulfilling this obligation, the insured protects their own interests as well, as failure to disclose material information can result in claims being denied or the policy being voided at a later date. This legal requirement highlights the importance of honesty and full communication in the insurance relationship, ensuring that both parties are aligned in their understanding of the risks involved.