Your insurance agent is sympathetic to having a neighbor who doesn’t seem to care as much as you about fire safety, but he tells you he can’t sell you such insurance, and he doesn’t think any ethical agent will. Why not? What principle of insurance law is involved?

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Insurance

You own a warehouse in an industrial district. This year you’ve installed the latest sprinkler and other fire remediation measures. You’re proud of the preventive steps you’ve taken, especially when you consider the neighboring warehouse where the owner has installed the bare minimum to comply with fire department regulations. You call your insurance agent and ask if you can take out fire insurance on the neighboring warehouse.

  • Your insurance agent is sympathetic to having a neighbor who doesn’t seem to care as much as you about fire safety, but he tells you he can’t sell you such insurance, and he doesn’t think any ethical agent will. Why not? What principle of insurance law is involved?