Your Duty of Disclosure

Your Duty of Disclosure

Your Duty of Disclosure is your obligation to be honest and tell us anything known to you and which a reasonable person would include in answer to the questions we ask.

To make an accurate assessment of the risk, insurers must be confident that the information disclosed is representative of the facts. If the information is not true, it is a misrepresentation.

As per Sections 21 and 21A of the Insurance Contract Act, a customer must:

  • disclose matters they know to be relevant to the policy
  • disclose matters that a ‘reasonable person in the circumstances’ would know to be relevant to the insurer

Under section 21A, insurers must ask customers specific questions about the risk when arranging new business. If a customer fails to provide satisfactory answers to questions expressed in vague or general terms, the insurer cannot claim there has been non-disclosure.

Customers do not have to disclose matters which:

  • diminish the risk
  • are of common knowledge
  • the insurer ought to already know in the course of its business
  • the insurer has waived its right to know about

Under section 11 of the Act, the duty of disclosures arises when

  • the contract is entered into
  • renewal
  • extension
  • variations
  • reinstatement

An insurer can avoid a contract where the insured (or the insured’s agent) has misrepresented the facts that an insurer relied upon to make an acceptance about the proposal and, if so, on what terms.

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