When must an agent disclose material facts?

An agent is obligated to disclose material facts as these are critical pieces of information that can influence the underwriter's decision to accept or reject an application for insurance. The correct approach is that agents must disclose material facts proactively and not solely based on whether they are asked. This duty is paramount as it ensures transparency and fairness in the underwriting process.

While it might seem that the agent could remain silent unless specifically queried, the responsibility extends beyond simple inquiries. Material facts may include information about the applicant’s financial stability, history of claims, previous insurance coverage issues, or any other relevant details that could affect the risk assessment.

Therefore, disclosing material facts is a fundamental duty that typically occurs before the proposal is submitted. Doing so ensures that underwriters have all necessary information to assess risks accurately. Integrity and ethical conduct in insurance practice highlight the need for this disclosure to protect the interests of all parties involved. Thus, it is essential for agents to act with due diligence and disclose material facts as a standard practice, reinforcing the importance of honesty and full disclosure in the insurance arrangement process.