In insurance policies, what does the term "material fact" refer to?

The term "material fact" in insurance refers to information that could influence a client’s decision to purchase a policy or the terms of coverage offered. This means that if a potential policyholder is unaware of certain facts that could affect their risk assessment or the pricing of their insurance, they might make a decision that is not fully informed.

For example, if a client has a pre-existing medical condition and does not disclose this information, the insurer may not be able to assess the risk accurately. This could result in either inadequate coverage or a miscalculation of premiums. By ensuring that all material facts are disclosed, both the insurer and the insured can engage in a fairer and more transparent relationship, leading to appropriate insurance solutions that reflect the true nature of the risks involved.