insurance, as most contracts between consumers and business, is built on trust, otherwise known as good faith. The insurance company trusts that you disclose all relevant facts and trust you they cover you when you need them.
A violation, of course, occurs when that trust is broken. If you, for example, do not say your life insurance provider that you used to smoke, then that is a breach of good faith.
It is possible for you to commit a breach of good faith, without knowing it. For example, if a family member died of heart disease and you do not mention when asked by your health insurance provider because you were not aware of this fact, it is a violation of the innocent faith. If you were aware and did not fill out forms in truth, of course, you would be guilty of non-disclosure or fraudulent breach of faith.
What happens if an insurer discovers an undisclosed fact or breach of good faith? First, your insurance policy is null and void. Your supplier is obliged to cover you. If the new information is discovered at the same time a claim is made, you can not receive payment of the debt. Based on new information that has come to light, your insurance provider can keep you on, but higher rates or ignore the incident.
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