Buying insurance is subject to a different rule of law than buying things such as buildings, cars, or refrigerators.

The general rule applicable to most purchases is "let the buyer beware." This has been much modified in these days of consumerism but still applies to many sales between private individuals, which is why you should be very careful buying a secondhand car from someone you don't know.

Insurance, by contrast, is subject to the rule of the "utmost good faith"

This means in practice that a business person taking out insurance must tell the insurance broker everything that would affect an underwriter's judgement in deciding whether or not to issue a policy or what premium to charge.

Just as the lawyers say, the applicant must disclose all the material facts. If these are not disclosed and the actual situation comes to light following a loss, the insurance company can say in effect "the risks are not what you said they were" _ and they don't have to pay. So come clean or you will probably have a useless piece of paper instead of policy worth thousands of dollars.

So the question comes here, what facts are material?

Naturally if there is an application form, answers to the questions will reveal many of them. But there may be some special features of your business not covered by the application and you must reveal these also. Previsous claims are important for all kinds of insurance, conviction of serious motoring offences for automobile insurance, the presence of flammable substances on your premises for fire insurance, and so on. Be safe rather than sorry; tell the full story.