The concept of Materiality is central to the Legal and Regulatory Compliance domain in the RIBO Level 1 Blueprint. Under Statutory Condition 1 (Misrepresentation) of the Fire policy and similar provisions in the OAP 1, an insurer has the right to void a contract only if the facts withheld or misrepresented were "material to the risk."

A "material fact" is defined as information that would influence a reasonable underwriter in deciding whether to accept the risk or what premium to charge. If an insured provides incorrect information that does not actually affect the underwriter's assessment (e.g., misspelling a middle name), it is not a ground for voiding the policy. However, if they fail to disclose that a property is being used for commercial purposes instead of residential, that is a material fact. The insurer does not need to prove that the misrepresentation was "malicious" or "intentional" (except in specific fraud cases); they simply need to prove that the information was incorrect and material. The RIBO Competency Profile requires entry-level brokers to identify and assess these facts during the application process to prevent future claim denials. Understanding this principle protects the broker from Errors and Omissions (E&O) claims because it emphasizes the broker's duty to ask probing questions. In the eyes of the law, the insurance contract is one of Utmost Good Faith (Uberrimae Fidei), and the "materiality" test is the objective standard used to determine if that faith has been breached.