Final answer:
The correct answer is c) Voidable by Cover-All because Bret's omission of his arson conviction is a material fact that would likely influence the insurance company's decision to issue coverage. Insurance contracts require full disclosure of material facts, and the insurer may void the contract if such a material omission is discovered.
Step-by-step explanation:
The situation described involves Bret, who has a previous conviction for arson, applying for insurance on a new building and failing to disclose his past criminal activity on the application. When asked about prior convictions, Bret's omission of his arson conviction is a significant detail that could influence Cover-All Insurance Company's decision to issue coverage.
As a general principle of insurance law, material misrepresentations or omissions can make an insurance contract voidable at the insurer's option. A fact is considered material if knowing the information would have led the insurer to reject the application or to agree to coverage on different terms. Since Bret's arson conviction is directly related to the insurance being sought (property insurance), it is likely considered material.
Therefore, the correct option would be c) Voidable by Cover-All because the omission is material to its decision to issue coverage. Contract law typically favors the party that was misled or not given the full information, which in this case would be Cover-All Insurance Company.