Under California Insurance Code Section 333, an applicant is NOT required to disclose which of the following to the insurer?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Section 333 lists the matters that neither party to a contract of insurance is bound to communicate except in answer to the other's inquiries: those which the other party knows; those which, in the exercise of ordinary care, the other party ought to know and of which the party has no reason to suppose the other ignorant; those which the other party waives; those which tend to prove a risk excluded by a warranty and are not otherwise material; and those relating to a risk excepted from insurance and not otherwise material. Because the insurer already knows the fact, the applicant has no duty to volunteer it. Material facts affecting risk classification, such as hazardous hobbies, health conditions, and dangerous occupations, must still be disclosed.
Why the other options are wrong
- A) A hazardous hobby that the applicant knows increases the risk of loss is a material fact affecting risk classification. It is not among the Section 333 exceptions, so it must be disclosed.
- B) A prior heart condition that would materially affect the premium is a material health fact. It must be disclosed and is not excused by the Section 333 exceptions. This option reflects a different rule and does not match the law that governs the transaction.
- D) A dangerous occupation is a material fact affecting the risk. It must be disclosed even if the insurer has not asked about it specifically, because it is not within the statutory exceptions.
Memory hook
No duty to teach what the other already knows. Concealment bites only for material facts the other side lacks.