Before you enter into a contract of general insurance with an insurer, you have a duty under the Insurance Contracts Act 1984 to disclose to the insurer every matter that you know or could reasonably be expected to know, is relevant to the insurer’s decision whether to accept the risk of insurance, and if so, on what terms. The same duty arises on renewal, extension, variation or reinstatement of the contract. Disclosure of matters such as cancellation or premium increase by insurer/s, past claims, physical risk, criminal convictions and insolvency will be especially important. However, disclosure is not limited to these matters, nor limited to the questions asked, nor limited to the named insured and therefore full disclosure including past business or private insurance is required.
If you fail to comply with your duty of disclosure, even innocently, the insurer may be entitled to reduce its liability in respect of a claim or may cancel the contract. If your non-disclosure is fraudulent, the insurer may also have the option of avoiding the contract from inception.