Insureds In A Material World: Defining "Material" In The Context Of Coverage

Insurance applications can be challenging. The questions are often ambiguous and remembering every piece of relevant information is difficult. However, being diligent is important, as an insurer may deny coverage of a claim if an insured incorrectly answered a question or failed to disclose material information. On the other hand, insureds should be aware that courts will scrutinize claims of inadequate disclosure on a reasonableness basis. Typically, insurers cannot rely on answers to ambiguous questions in application materials unless the nature of the risks those questions sought to elicit is obvious or was brought to the insured's attention.

Defining "Material"

Ontario's Insurance Act requires that applicants disclose every fact within their knowledge that is "material" to the insurance.¹ The failure to disclose a material fact may render a policy voidable by the insurer.² In other words, the insurer can treat the policy as if it had never been in force, as