Under California Insurance Code Section 331, concealment of a material fact entitles the insurer to rescind the policy:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC Section 331 provides that concealment, whether intentional or unintentional, entitles the injured party to rescind the insurance. California therefore does not require proof of intent or fraud for concealment to be actionable; even a good-faith failure to disclose a material fact may allow the insurer to rescind. This strict rule exists because the insurer underwrites based on the information provided, and any material gap, however innocent, distorts the risk assumed. The applicant's signed acknowledgment of the application strengthens proof of the duty but is not a precondition to rescission.
Why the other options are wrong
- B) Section 331 expressly covers unintentional concealment as well, so a deliberate fraudulent intent is not required.
- C) Rescission flows from the materiality of the concealed fact at the time of application, not from causation of the specific loss.
- D) No signed acknowledgment is required for Section 331 to operate; the concealment doctrine arises from the duty of utmost good faith.
Memory hook
Even an honest slip can sink the contract; Section 331 does not read minds, it reads the application.