Duty of Disclosure – Commercial Insurance

Before you enter into an insurance contract, or renew or vary it, you have a duty under the Insurance Contracts Act 1984 to tell the insurer anything you know (or could reasonably be expected to know) that may affect their decision to insure you and on what terms.

You have this duty until the insurer agrees to enter into, renew, or vary the contract.

You do not need to tell the insurer anything that:

1. reduces the risk they insure you for;
2. is common knowledge;
3. they know or should know as insurers; or
4. they have waived your duty to tell them about.

If you do not tell the insurer something you are required to, the insurer may cancel your contract or reduce the amount paid if you make a claim, or both. If your failure is fraudulent, the insurer may refuse to pay a claim and treat the contract as if it never existed.

Duty not to make a misrepresentation – Consumer Insurance Contracts

For consumer insurance contracts (such as home, contents, motor, travel, and personal accident insurance), you have a legal duty under the Insurance Contracts Act 1984 not to make a misrepresentation to the insurer.

When you apply for insurance, renew it, or vary it, the insurer may ask you specific questions to help them decide whether to insure you and on what terms. You must take reasonable care not to make a misrepresentation when answering these questions.

A misrepresentation is a false statement of fact. If you fail to take reasonable care and misrepresent information, the insurer may reduce or deny a claim, or even cancel the policy. If your misrepresentation is fraudulent, the insurer may refuse to pay any claims and treat the policy as if it never existed.