[Insurance as a Contract: The Insurance Policy]A person applies for fire insurance on their house...

Insurance contracts are built on the principle of utmost good faith, meaning applicants must disclose all material facts that could influence the insurer’s decision to accept the risk or determine the premium. Failing to mention a material fact—such as the home being unoccupied for long periods—is considered non-disclosure. Unoccupancy increases the risk of vandalism, frozen pipes, fire severity, and delayed emergency response, all of which affect underwriting decisions.

Option A, negligence, refers to failure to act with reasonable care, not failure to disclose.

Option C, breach of warranty, applies only after a policy is in force and a condition guaranteed to be true is violated.

Option D, discharge of contract, refers to cancellation or completion of contractual obligations.

Since the issue arises during the application stage and involves withholding a material fact, the correct classification is non-disclosure.