What can happen if a broker fails to disclose material information?

When a broker fails to disclose material information, the consequence is that the coverage may be voided. In the context of insurance, material information refers to any facts that would influence an insurer's decision to provide coverage or the terms of that coverage. When such information is not disclosed, it can lead to a significant misunderstanding between the insurer and the insured, potentially undermining the contractual obligation.

If a broker withholds material information, the insurer may argue that they would not have provided the policy or would have altered the terms had they been aware of the full context. Consequently, the insurer has the right to void the policy, which means that they can consider the policy never to have existed and may deny any claims made under it. This is a critical point in insurance practice, as transparency and full disclosure are vital components of a valid insurance contract.

The other options do not align with the established principles of insurance. For instance, disregarding the information or stating that no consequences will occur does not take into account the pivotal role that material facts play in underwriting decisions. Additionally, the idea that a policy may be renewed without disclosure does not consider the potential for voidance of the coverage due to lack of transparency.