A more thorough explanation:

An honesty clause is a provision in an insurance policy that requires the insured to disclose all relevant information about the insured property or item. This clause penalizes the insured if they provide less information than required in the policy application. The honesty clause is also known as a full-reporting clause.

For example, if a homeowner fails to disclose that their home has a history of flooding, and they experience flood damage, the insurance company may deny their claim because they did not disclose all relevant information. This is because the honesty clause requires the insured to provide complete and accurate information about the property or item being insured.

Another example is if a car owner fails to disclose that they have installed aftermarket modifications to their vehicle, and they get into an accident, the insurance company may deny their claim because they did not disclose all relevant information. This is because the honesty clause requires the insured to provide complete and accurate information about the item being insured.