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Consumers have a duty to disclose relevant information (2007)

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The Ombudsman for Short-Term Insurance says that consumers have a duty to disclose relevant information and any material changes in circumstance, to their insurers to avoid the possibility of having their claim repudiated or the policy cancelled.

"A large percentage of the matters that come to our offices arise from an alleged non disclosure of information by the insured to the insurer", says Brian Martin, Ombudsman for Short-Term Insurance. The insurer complains that had the correct information been furnished, it would not have accepted the risk proposed for, or only on substantially different terms.

Consumers have a duty to disclose information at the time of taking out insurance and again when any change in circumstances occur which might affect the risk being insured, such as a change in your residential address, or a change in the identity of the regular driver of the vehicle. It is essential that accurate answers be given at the time of proposal and information furnished regarding your financial status including judgements taken against you and adverse credit postings.

"Honesty and accuracy is without a doubt the best policy", says Brian. An insurer will take all information into account when it comes to accepting the risk and its willingness to insure it. It might also affect the premium charged. In terms of the Short-Term Insurance Act all information needs to be disclosed that a reasonable person would regard as material for the insurer to properly underwrite the risk. If in doubt about something, rather disclose it. The Ombudsman reviews each case on its own merits and applied principles of equity and fairness in reaching a decision.

All disclosures should preferably be made in writing and consumers should keep a copy of the communication. However, some insurers conduct all their business on the phone and these calls are recorded. When making a change to your policy, make a note on your policy of the time and date of the call, whom you spoke to, and what change you affected. It is standard practice for an insurer to send an updated schedule or endorsement of the policy to the insured once the changes have been made. If consumers make use of an insurance broker, make sure that you receive an acknowledgement from him or her in writing of your request. "Essentially what we are saying is that consumers need to be proactive in advising their insurer of changes to their lifestyle to avoid possible problems in the future". If you are unsure about anything on the policy, consult with a professional such as a broker or attorney, for advice prior to committing to anything.

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