Under California Insurance Code Section 334, the materiality of a fact is determined by:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC Section 334 provides that materiality is determined not by the event but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming an estimate of the disadvantages of the proposed contract or in making inquiries. In other words, a fact is material if the insurer, had it known the truth, would reasonably have rejected the risk or charged a different premium. Critically, materiality is judged from the insurer's perspective before the loss occurs, not by hindsight about whether the hidden fact caused the actual loss.
Why the other options are wrong
- B) Section 334 expressly states that materiality is not determined by the event; whether the fact caused the loss is irrelevant to the materiality test.
- C) The insured's private belief does not control; the standard is the probable and reasonable influence on the insurer.
- D) The premium paid does not define materiality; materiality concerns the facts that would have influenced the insurer's acceptance or pricing decision.
Memory hook
Materiality = 'would the insurer have said no or charged more?' Judged by the insurer's eyes, not by the loss that later happened.