The Duty of Disclosure sounds important and it is.
If you want to purchase an insurance policy, you must comply with the Duty of Disclosure.
Duty of Disclosure is a legal principle and it means that you must tell the insurance company anything that you or a reasonable person in your circumstances would know and which is relevant to the insurance company’s decision to offer a policy to you.
The Duty of Disclosure applies whenever you apply for insurance, wish to change an existing policy or renew a policy.
You do not need to tell the insurance company anything that it already knows (or should know). You also do not have to tell it anything which reduces its risk in offering cover to you. You do though need to tell it anything that you know which might increase its risk.
The Duty of Disclosure is outlined in the Insurance Contracts Act (1984) which is Commonwealth legislation. It applies to all types of insurance. The Duty of Disclosure requirements have changed in recent years. These days, an insurance company cannot ask a “catch-all” question; that is ask if there is anything they should know. Now, insurance companies must ask specific questions to determine if they can offer cover to you. You in turn must answer these questions truthfully.
So, what does this mean for travel insurance?
When you apply for a travel insurance policy, the insurance company will ask you a series of questions about your age, where you are going and for how long. Your answers to these questions help the insurance company operative prepare a provisional quote for you (provided you meet standard underwriting guidelines relating to duration of travel, age of traveller/s and destination/s). Once a provisional quote has been prepared, the insurance company operative will ask for more specific information. For instance, if you will be doing any hazardous activities / sports and if you have any pre-existing medical conditions. They may also ask further questions which help them decide if you and your trip meet their underwriting guidelines; that is whether they can offer a policy to you and if so at what cost. Your Duty of Disclosure means you must answer these questions honestly and fully. Failing to disclose full and accurate information may result in a policy being cancelled and/or a claim being refused.
So what don’t you need to disclose?
You don’t need to tell the insurance company anything it already knows (eg details they already hold about you in their records). Although it may be that the insurance company asks you to confirm the details are still correct and valid or if anything has changed. You don’t need to tell them anything which is public knowledge or that is their business to know. For instance, if you’re travelling to Europe in the northern hemisphere winter, you don’t need to tell the company that snow might affect public transport schedules. It is reasonable to expect that a travel insurance company would already be aware of this potential.