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Simple English definitions for legal terms
full-reporting clause
Read a random definition: terminate
A quick definition of full-reporting clause:
A full-reporting clause is a rule in an insurance policy that requires the person being insured to tell the truth about the value of what they are insuring. If they don't tell the truth, they can be punished. The clause also says that the amount of money the insurance company will pay out will be based on the value that was last reported, compared to the actual value.
A more thorough explanation:
A full-reporting clause is a term used in insurance policies that requires the insured to disclose all relevant information about the insured property or item. This clause penalizes the insured if they fail to reveal the actual value of the property or item in the policy application. It is also known as an honesty clause.
For example, if a homeowner fails to disclose that their house has a swimming pool, and the pool is damaged in a storm, the insurance company may refuse to pay for the damages because the homeowner did not disclose the pool's existence in the policy application.
Another example is when a business owner insures their inventory but fails to disclose the actual value of the inventory. If there is a fire, and the inventory is destroyed, the insurance company may only pay a portion of the claim because the insured did not report the actual value of the inventory.
The full-reporting clause is designed to ensure that the insurance company has accurate information about the insured property or item, which helps them determine the appropriate premium and coverage amount. It also protects the insurance company from fraud and misrepresentation by the insured.