Question

A lightning strike causes one of the storage buildings on John's farm to burn to the ground, aided by the fuel tanks he kept in the building. John knows he wasn't supposed to store any fuel in the building, so he keeps that piece of information to himself when he files a claim. John's insurer may deny his claim based on his:

Option 1: Concealment
Option 2: Negligence
Option 3: Misrepresentation
Option 4: Non-disclosure

Answer 1

John's insurer may deny his claim based on non-disclosure because he failed to report storing fuel in the building, which contributed to the fire and hence altered the risk associated with insuring the property.

Step-by-step explanation:

The insurer may deny John's claim based on his act of non-disclosure. When filing a claim, it is essential to accurately report all pertinent details, as omitting critical information, like not supposed to store any fuel in the building, may invalidate the claim. In insurance terms, this is known as non-disclosure, where a policyholder fails to reveal a relevant fact or conceals information that would affect the insurance company's decision to cover the loss. If the insurance company discovers that John deliberately hid the fact that he stored fuel which contributed to the fire, they may have grounds to deny the claim because it was a clear misrepresentation of the circumstances under which the property was used, and it impacted the risk associated with insuring it.