You must disclose all facts that could impact an insurance underwriter’s view of the risk you are presenting when you buy an insurance policy. The ‘risk’ is what you’re seeking insurance for – it could be your business, car or a client’s property.
If for, example you are insuring a property that has flooded, you must let the broker and/or insurer know. This is known as ‘disclosing material facts.’
If you fail to disclose and a claim is later made, the insurer may have the right to:
- Not pay the claim;
- Reduce the payout; or
- Cancel the policy altogether
This duty applies not just when you first take out the policy but also throughout the policy year and, when you renew the policy even if you are remaining with the same broker and insurer. Examples of changes that should be notified during the policy year include:
- Starting to provide a new service e.g. a Letting Agent moving into Block Management
- A significant increase in turnover (note policies for smaller businesses will often have an upper cap on turnover within the policy year)
- A change to the tenure of a property
- Works being undertaken at a property
It’s not always obvious what an insurer considers material, so if you’re unsure whether to disclose something, it’s safest to tell them and keep a record of the correspondence. The same applies to anything that might lead to a claim. If you’re in doubt, take the cautious approach and talk to your broker or insurer.
