Duty of Disclosure

In order to make an informed assessment of the risk and calculate the appropriate premium, your insurers need information about the risk that you are asking it to insure. This information extends to anyone seeking to be covered by the policy.

For this reason, before you enter into a contract of general insurance with an insurer, you have a duty, under the Insurance Contracts Act 1984, to disclose to the insurer every matter that you know, or could be reasonably expected to know, that is relevant to the insurer's decision whether to accept the risk of insurance and, if so, on what terms.

You have the same duty to disclose those matters to the insurer before you renew, extend vary or reinstate a contract of general insurance.

You do not have to disclose anything that:

  • reduces the risk to be undertaken by the insurer;
  • is common knowledge;
  • your insurer knows or, in the ordinary course of business ought to know; or
  • if the insurer has waived your obligation to disclose.

If you do not comply with your duty of disclosure, your insurer may be entitled to reduce its liability under the contract in respect of a claim, or may cancel the contract.

If the non-disclosure is fraudulent, the insurer may be able to avoid (or cancel) the contract of insurance from its beginning. This would have the effect that you were never insured.