Failure, on the part of the agent, to disclose certain Latent Defects known by the agent, to the third party. These are defects in a property which cannot be readily seen or discovered by an "arms length" inspection of the property by the third party. Examples include: termite infestation, faulty plumbing, faulty wiring, leakage of roof or basement which has been covered over, etc. AN AGENT IN ALABAMA IS BOUND TO DISCLOSE EVERY LATENT DEFECT OF WHICH HE/SHE HAS KNOWLEDGE THAT COULD AFFECT THE SAFETY OR HEALTH OF BUYER. Failure to disclose such defects constitutes Fraud and is grounds for suit for damages, recision of contract, and disciplinary action.
A contract of insurance is based on utmost good faith. An applicant for insurance is required to disclose to the company all material facts which are necessary to underwrite a policy. If the applicant does not disclose all these facts, he/ she is guilty of non-disclosure and may risk having coverage voided from inception.