Elias applies for a Commercial Property insurance policy for his custom woodworking shop. During the application process, the following details are established:
1. Elias states that the building's roof was replaced 5 years ago, though he later realizes it was actually 6 years ago. This inaccuracy does not affect the premium or underwriting decision.
2. He agrees to a specific policy condition guaranteeing that a central burglar alarm system will be kept active and monitored at all times.
3. The application explicitly asks if any highly hazardous materials are kept on the premises. Elias intentionally leaves this question blank to hide the fact that he stores large quantities of highly flammable varnishes in an unventilated basement.
Based on general insurance contract law, which of the following statements are correct? (Select all that apply)
- The intentional omission regarding the highly flammable varnishes constitutes material concealment, providing the insurer with valid grounds to void the policy.Answer
- The provision requiring an active central burglar alarm is an express warranty, meaning strict compliance is required for coverage to apply to a related loss.Answer
- CThe one-year discrepancy regarding the roof replacement is considered a breached warranty, automatically invalidating the entire insurance contract.
- DIf the insurance producer discovers the roof age discrepancy before submitting the paperwork, the producer may independently cross out the error and write in the correct year.