Which term describes withholding a material fact during negotiations, as opposed to making false statements?

Which term describes withholding a material fact during negotiations, as opposed to making false statements?

• A. Concealment
• B. Misrepresentation
• C. Fraud
• D. Negligence

Answer: (A)

Withholding a material fact during negotiations is concealment. In insurance, a material fact is something a reasonable underwriter would consider important when deciding whether to issue a policy or how to price it. Concealment is an omission—you don’t reveal information you know is relevant. This differs from misrepresentation, which involves making an affirmative false statement about a material fact. Fraud is a broader term that covers deception intended to gain something, and can include concealment if there’s an intent to deceive. Negligence would be failing to disclose information due to carelessness, not intentional withholding.

Withholding a material fact during negotiations is concealment. In insurance, a material fact is something a reasonable underwriter would consider important when deciding whether to issue a policy or how to price it. Concealment is an omission—you don’t reveal information you know is relevant. This differs from misrepresentation, which involves making an affirmative false statement about a material fact. Fraud is a broader term that covers deception intended to gain something, and can include concealment if there’s an intent to deceive. Negligence would be failing to disclose information due to carelessness, not intentional withholding.