What happens to an insurance contract in the event of fraud?

An insurance contract that involves fraud is typically considered null and void. This means that the contract has no legal effect and cannot be enforced by either party. When one party to the contract intentionally provides false information or conceals important facts to gain an advantage, it undermines the trust and basis of the agreement. Fraud violates the principle of utmost good faith that is essential in insurance contracts. With this principle breached, the insurer has the right to void the contract, effectively treating it as if it never existed.

While some contracts may have terms that allow for certain provisions to be voidable, fraudulent conduct generally leads directly to the annulment of the entire contract because it compromises the very foundation upon which the agreement was built.