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Duty of Disclosure

Where the contract is a consumer insurance contract (see below), the following duty will apply:

You have a duty to take reasonable care not to make a misrepresentation to us when you answer questions that an insurer asks or when providing them with information which is relevant to their decision to insure you and on what terms. This duty applies when you first apply for the policy, when you request changes to your policy, or at renewal.

You must answer the insurer’s questions with all relevant and complete information, and you must not misrepresent any information that you give to the insurer.

If you fail to comply with your duty, and the insurer would not have issued the policy for the same premium and on the same terms and conditions if you had complied with your duty, the insurer may be entitled to reduce its liability under the policy in respect of any claim or it may cancel the policy.

If your failure to comply with your duty is fraudulent, the insurer may refuse to pay a claim and treat the policy as never having been in existence.

Where the contract is not a consumer insurance contract, the following duty will apply:

Before entering into a contract of general insurance with an insurer, there is a duty, under the Insurance Contracts Act 1984 (Cth), for you to disclose to the insurer every matter which is known or could reasonably be expected to be known and which is relevant to the insurer's decision whether to accept the risk of the insurance and, if so, on what terms. You have this duty until the insurer agrees to insure you.

The same duty applies before renewal, extension, variation or reinstatement of a contract of general insurance.

It does not require the disclosure of a matter that:

  1. diminishes the risk
  2. is of common knowledge
  3. the insurer knows or, in the ordinary course of business, ought to know
  4. as to which compliance with the duty of disclosure is waived by the insurer.

A consumer insurance contract is insurance obtained wholly or predominantly for the insured's personal, domestic or household purposes or where the insurer has identified that the policy is a consumer insurance contract. Check with LCA Insurance if you are unsure about which duty applies.

NON DISCLOSURE

Failure to comply with the duty, may entitle the insurer to reduce the amount they will pay you if you make a claim or cancel the contract.

If your failure to tell the insurer is fraudulent, the insurer may also refuse to pay the claim and treat the contract as if it never existed.

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