In case of Adam, in order to claim the amount of his insurance, he should be considering good industrial practices that may change the scenario. A contract of insurance has also been referred to as the contract of extreme good faith. Disclosure of all the facts that are materialistic has to be done by the customers with respect to which the risk is being covered.
A fact that is materialistic is referred to as the one which would result in influencing an underwriter when the decision is being taken related to acceptance or rejection of the risk along with the terms and conditions that are to be applied. If there is failure from the side of the customer in disclosing or misrepresenting the facts that are materialistic and that results in inducing the insurer for accepting the proposal made with respect to the risk; the lawful remedy has been identified as the avoidance of the policy (Foss, 2009).
It has been provided by the Insurance Act of Australia for giving relevant safeguards for the parties holding the policy. In consideration with the good industrial practices, it is also the responsibility of the insurers for asking questions with respect to the facts that have been considered materialistic in a clear manner. While taking the decision as to whether the policy should be avoided or not, the reliability of the insurers must be on the answers that are withheld or given (Foss, 2009). Avoidance of the policy should only be done where the facts had not been disclosed or misrepresented with a reckless or deliberate intention and not in the case when the customer is innocent.
In consideration with these practices, it can be stated that as the intention for disclosing or misrepresenting the facts had not been deliberate, he has the right of claiming his sum of insurance.