If any insured intentionally conceals or misrepresents any material fact related to the homeowners policy, what happens?

• A. Coverage remains in force
• B. Coverage is excluded for all insureds
• C. Only the concealing party is excluded
• D. Coverage is reduced by 50%

Answer: (B)

Concealment or misrepresentation of a material fact breaks the insured’s obligation to deal in good faith and can void the insurance contract. In a homeowners policy, that breach generally means the entire policy can be voided from the start, so there is no coverage for any insured on that policy. The contract is built on honesty; once a material fact is knowingly hidden or misrepresented, the insurer may rescind the policy as to all insureds rather than apply a partial exclusion. That’s why coverage is considered excluded for all insureds. Partial or limited relief isn’t supported by this rule, and simply keeping coverage in force would ignore the fraud involved.