Adam had made a purchase of premises to be utilized for assembling of machinery. Adam had taken out an insurance policy of the building for covering both, the contents of the building as well as the entire building from loss by fire. The contract had been made with TWI Insurance. However, while filling the form for the insurance policy and providing relevant information, some of the questions in the form had been left blank in a rush. He had only stated that his main business was involved in assembling the machinery. After two months, changes started to take place and the new business started that involved the activities related packing up the construction explosives. However, soon there was an explosion and the fire destroyed both, the contents of the building as well as the building.
As he approached towards the insurance company for claim, it was found that the ventilation in the room where explosives were being stored was inadequate and inappropriate. This can be referred to as the case related to non disclosure in insurance.
Non-disclosure can be referred to as the situation in which the party fails in revealing important facts when the contract of insurance is being applied for. It has been identified in a large number of cases that in such situations that is involvement of non-disclosure, application of strict lawful position can lead to unduly harsh result for the parties (Clarke, 2004). For this particular reason, while dealing with the cases of insurance where there is involvement of misrepresentation or non-disclosure, the case is resolved by considering the law as well as good industrial practice.