DUTY OF DISCLOSURE
Before you enter into an insurance contract, you have a duty to tell the insurer anything that you know, or could reasonably be expected to know, may affect their decision to insure you and on what terms.
You have this duty until they agree to insure you.
You have the same duty before you renew, extend, vary or reinstate an insurance contract.
You do not need to tell the insurer anything that:
- reduces the risk they insure you for; or
- is common knowledge; or
- they know or should know as an insurer; or
- they waive your duty to tell them about.
If you do not tell the insurer something
If you do not tell the insurer something you are required to, they may cancel your contract or reduce the amount they will pay you if you make a claim, or both.
If your failure to tell them is fraudulent, they may refuse to pay a claim and treat the contract as if it never existed.
DUTY TO TAKE REASONABLE CARE NOT TO MAKE A MISREPRESENTATION NOTICE
Under Australian insurance law you have a duty to take reasonable care not to make a misrepresentation to the insurer before the contract of insurance is entered into. A misrepresentation is a false answer, an answer that is only partially true, or an answer which does not fairly reflect the truth. This means when getting a quote, buying or amending a policy, you need to answer all questions accurately and completely.
This duty applies in the same way to someone answering the questions on your behalf, as well as anyone else who answers the questions and is to be covered by the policy.
If you are sent a renewal invitation you also need to check if all of the information on it is accurate and complete.
If the duty is not met
If the duty is not met, this can have serious impacts on your insurance. Your cover could be avoided (treated as if it never existed), or its terms may be changed. This may also result in a claim being declined or a benefit being reduced.
Please note that there may be circumstances where insurers later investigate whether the information given to them was true. For example, they may do this when a claim is made.