The Importance of Disclosure: Insurance

Posted in Wealth
05/04/2013 Level One

Whenever you apply for an insurance policy, you have a Duty of Disclosure to the insurer under the Insurance Contracts Act 1984. This means that you must disclose every matter that you know, or could be reasonably expected to know, to the insurer which is relevant to their decision as to whether to insurer you or not.

Relevant matters are:

  • Past and current health issues;
  • Relevant details about your occupation and the duties you perform;
  • Lifestyle issues, such as pastimes and activities that may be considered dangerous;
  • Relevant family medical history;
  • Anything else that may affect your eligibility for insurance.

The insurer uses the information you provide in your insurance application to determine whether they are willing to take on the risk of insuring you or not. In some instances where you are seen to have a higher level of risk than normal, the insurer may impose a loading or exclusion on your policy.

  • A loading means that the insurer will offer you the insurance applied for but you will pay a higher or loaded premium. A loading may apply to persons that have significant health issues.
  • An exclusion means that the insurer will offer the insurance as applied for but will exclude an activity or issue. This means that if you make a claim for the excluded item they will not pay your claim. Exclusions may apply for people that have dangerous pastimes.

Non-disclosure can result in the insurer not paying out your sum insured in the event you need to claim. This can be devastating when you have paid your premiums all along to be denied your claim.

Recently we had a client make a claim on a policy, that was established many years ago, and the insurer denied the claim due to non-disclosure of their full medical history. The claim was denied upon the insurance company obtaining the insured’s past medical files and identifying that relevant information was omitted in the initial application.

The insurer stated that if they had of known about the medical history they would not have offered the insurance under the same terms, resulting in the insured being denied their claim.

To avoid this outcome you should always disclose all relevant information to your insurer. This applies to the initial application as well as an application for additional cover, applications to increase or reinstatements.


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