Half-Truths, Whole Lies, & the Duty of Disclosure in Insurance Law

Abstract

A half-truth need not be a whole lie for insurance purposes; insurance law must distinguish between concealment and misrepresentation for equity and efficiency reasons. Reasonable disclosure should be the goal of underwriting, though what is “reasonable” should depend upon the insured’s degree of sophistication. This Comment argues that, whereas it may be equitable and efficient to relax the disclosure duty for the average person, it makes sense to raise this duty for the commercial insured. This argument is normative—asking what the duty ought to be, rather than what it is—though it finds empirical support in the case law.