Probably just an example. The real condition could be a hiring policy that is technically illegal, a question about prodict that is a trade secret, or questions about business sustainability that might be secret etc.

This is the best answer. This way if the insurance company is defrauded it's only your own rates that increase, not the percent the company has agreed to pay.

I think that answers is equivalent to the company not convering ransom and kidnapping, is the employee who establish and pay such coverage. So technically is a different problem.