What might be an insurer's response if an insured fails to report a significant change in risk?

When an insured fails to report a significant change in risk, the insurer can respond by denying future claims related to that change. This is grounded in the principles of insurance, specifically the obligation of the insured to disclose all relevant information that could affect the underwriting process and the terms of the policy.

Insurance contracts are based on the principle of utmost good faith, which requires both parties—the insurer and the insured—to act honestly and transparently. If a significant change occurs and is not reported, it can alter the risk profile of the insured, potentially affecting the insurer's ability to assess risk accurately and set appropriate premiums.

In such cases, if a claim arises that is connected to the unreported change, the insurer reserves the right to deny coverage on the grounds that the policyholder did not adhere to their obligation of disclosure. This is critical for protecting the insurer's financial interests and maintaining the integrity of the insurance contract. By denying claims tied to undisclosed changes, the insurer ensures that it can manage risk appropriately and uphold the principles on which the policy was originally issued.