Understanding Your Duty of Disclosure

Each time you take out a new insurance policy, or renew an existing insurance policy, you are entering into a new contract with the insurer. Under the Insurance Contracts Act 1984 you are required to tell your insurer any information you know or may reasonably be expected to know, which may affect their decision to insure you and on what terms. This is called your Duty of Disclosure.

This duty also applies when you extend, alter, vary or reinstate an insurance policy.

You must also advise your insurer if anything changes during the term of your policy. In some cases, changes to your circumstances can result in the cancellation of your insurance policy, for example, if you modify your vehicle or you are convicted of a criminal offence.

If you do not advise your insurer of something which may affect the terms of your policy, youmay be found to be in breach of your Duty of Disclosure and the insurer may deny a claim.

Here are some examples of changes which may affect particular types of insurance:

Motor Vehicle Insurance

• There is someone driving your vehicle who is not listed on your policy
• The garaging address of your vehicle has changed

Home and Contents Insurance

• You have started running a business from home
• You have undertaken or are in the process of undertaking renovations to your building

Business Insurance

• Your expected annual turnover has changed
• There are changes to your business activities

Some information is relevant to all types of insurance policies and should be communicated to your insurer.

For example:

• You have been declared bankrupt
• You have been charged with a criminal offence
• You have been denied insurance by an insurer

However, under the Insurance Contracts Act you are not required to tell the insurer:

• Any information which reduces the risk
• Information which is of common knowledge
•  Information which the insurer knows or in the ordinary course of their business, ought to know.

If you are unsure whether something should be disclosed to the insurer, discuss it with your broker. Your broker will know if the information is relevant and will advise your insurer accordingly. 

To discuss your Duty of Disclosure and how it affects your insurance, call us on 1300 PROFIN (1300 776 346).