A material change in an insurance policy must be reported to the Insurer promptly. What constitutes a material change?

Material changes in an insurance policy are significant enough to affect the risk assessment made by the insurer. When determining what constitutes a material change, the focus is on changes that directly increase the insurer's risk exposure. The introduction of a new feature that increases the chance of loss is a clear example of such a change, as it can directly influence the likelihood or extent of a claim being made.

For instance, if a policyholder installs a swimming pool, this could elevate their risk exposure due to potential accidents. The insurer needs to be informed of such developments so that they can reassess the coverage, possibly adjusting premiums or terms based on the new risk profile.

In contrast, changes like a policyholder's address or minor property alterations might not significantly impact the overall risk assessed by the insurer and usually do not require prompt notification. Similarly, changes in premium rates might reflect adjustments to the cost of insurance but do not intrinsically alter the risk posed by the insured property or individual. Therefore, understanding the implications of a material change is crucial for both the policyholder and the insurer.