What does an insurance policy typically require to be valid?

An insurance policy typically requires accurate disclosures of the insured risks to be valid. This is essential because the insurer relies on the information provided by the policyholder to assess the risk associated with insuring that individual or entity. If the disclosures are inaccurate or incomplete, it may lead to an unfair underwriting process and can ultimately result in claims being denied. This principle is rooted in the concept of "utmost good faith" (uberrima fides), which is foundational in insurance contracts, emphasizing the necessity for both parties to act honestly towards each other.

The requirement for accurate disclosures ensures that the insurer has a clear understanding of the risks they are taking on, enabling them to set appropriate premiums and coverage terms. Without this crucial step, the basis for the agreement is compromised, potentially leaving both parties in a precarious situation.

While other factors, such as premium payment and signed agreements, may be necessary for many policies, they do not equalize the requirement for complete and truthful disclosures regarding the risks involved.