When can an insurer cancel a contract due to fraudulent non-disclosure?

An insurer can cancel a contract due to fraudulent non-disclosure before the inception of the contract. This stems from the principle that a contract is fundamentally based on the trust that both parties will provide all material facts relevant to the insurance agreement. If an applicant fails to disclose significant information that could influence the insurer's decision to provide coverage or the terms under which it is offered, this non-disclosure can be deemed fraudulent.

When the insurer discovers that there was fraudulent non-disclosure prior to finalizing the contract, they have the right to void the agreement because they were misled in their decision-making process regarding the risk they were accepting. This option highlights the importance of transparency and honesty in the relationship between the insurer and the insured right from the start.

In contrast, if fraudulent non-disclosure is discovered after the inception of the contract, the insurer may have different recourse, not necessarily leading to cancellation before the contract is executed. Thus, the timing of the contract's inception plays a crucial role in determining the insurer's rights and options related to fraudulent non-disclosure.