Most of us give little thought to our insurance from week to week. We hope that we never need to use our insurance. If the day comes where we do then we expect our insurer to treat us fairly and to provide a good claims service.
For our insurance to work as we wish when we need it, it’s crucial that we arrange it on the correct basis. We’re going to look briefly at the policyholder’s duty to accurately disclose all relevant information – both from the start and ongoing.
Receiving a Quote
When we request a quote for our car or home insurance the insurer asks a lot of questions – about us and about the property (the car or home) we want to insure. Based on the information we provide (our declaration of material facts), the insurer assesses the risk and decides whether or not they will offer a quote. If so, they decide on the premium and what terms will apply to the insurance contract.
The questions asked of us and our answers, plus any further information we provide to the insurer, are presented back to us on a proposal form, or statement of fact. We are asked to check that the information is accurate and complete, and to notify the insurer of any corrections or additional information.
It’s important that we answer the questions asked of us accurately and fully. If we don’t, and the insurer bases their assessment of the risk on incomplete or inaccurate information, then it could result in the insurer calculating and charging a premium that differs from what they should have charged. Worse, it could be the difference between the insurer deciding to quote or not.
The need to present risk information fully and correctly doesn’t apply only when you take the policy out. It applies for the duration of the policy. For example, when you change your car you will notify your insurer of the change and get a Certificate of Insurance covering the new car. What if you get penalty points for speeding? Your insurer will need to know, and will want to reassess the risk either at that time or before your next policy renewal date.
The consequences of failing to present information fully and correctly can be severe. If the insurer becomes aware of information that ought to have been provided to them earlier, they are entitled to reassess the risk and treat it as they would have done initially.
This can result in an insurer refusing to pay a claim and either cancelling the policy (in circumstances where they insurer concludes that they would not have offered insurance cover had all relevant information been disclosed to them) or treating it as void. Having a policy cancelled by an insurer or treated as void will affect our ability to access insurance cover going forward. All insurers ask about insurance history and most refuse to quote where the proposer has previously had a policy cancelled or treated as void by an insurer.
Having those insurance policies should provide peace of mind. Please take care to ensure that your insurances are arranged and maintained on the correct basis.