When you apply for insurance, you have a legal duty to disclose all relevant information to your insurer. Otherwise, you risk having a claim rejected when you need funds the most.

Insurance gives you peace of mind that you're protected if the worst happens. Should you suffer a serious illness, injury or accident that leaves you unable to work, it’s essential that your claim be paid quickly, giving you and your family critical funds. However, your premiums may prove worthless if your claim is rejected at this time. Disclosing all relevant information when you apply is the key to ensuring this doesn’t happen.

Your legal obligations

Increasingly, consumers are purchasing policies online without expert advice. However, before you enter an insurance contract, you should be aware that you have a legal ‘duty to disclose’ under the Insurance Contracts Act 1984 (section 21 for General Insurance and section 29 for Life Insurance). This means you must tell the Insurer everything you know, or could reasonably be expected to know, which is relevant to their decision.

We have handled many claims over 40 years. Fortunately, most have been paid. Some, however, do hit ‘snags’. People having failed to disclose something important is often the cause.

An insurer is obliged to ask an applicant a number of questions on a proposal/application form. These questions may be asked in person, online or in a written contract. If an insurer fails to ask specific questions, then it is deemed to have waived the applicant's obligation to comply with their duty of disclosure.

The applicant is required by law to provide answers for themselves and anyone else to whom the questions apply. If you want the insurance policy to cover the risks you are being insured for, then you must fulfill your duty of disclosure.

What happens when you renew or extend policies?

Most life and disability policies in Australia are ‘guaranteed renewable’. Meaning, once the policy is in force it renews each year and you are not required to inform the insurer of any changes.

However, with other policies, such as accident or sickness or general insurancefor your home, motor vehicle or travel, you have the same duty to disclose before you renew, extend, vary or reinstate a contract of general insurance.

What happens if you don’t disclose?

If an insurer believes an applicant has failed to adequately disclose they may refuse to pay a claim and/or cancel the policy. The insurer is then responsible for establishing the applicant’s failure to comply.

Although it's not easy for insurers to void a life insurance contract, it is critical to err on the side of caution, particularly in regard to your medical history. After all, life and disability insurance are serious matters. If you die or are permanently injured, you want the security of knowing that your insurer will pay a claim that can take care of your family's future.

Any information that deals with your medical history is considered relevant. If an insurer asks a question on a form, then that information is relevant to their decision. This includes pre-existing conditions and risks, such as a pre-diabetes diagnosis, childhood asthma, or any history of back pain, anxiety, depression, or substance abuse. Even if you no longer suffer from an old illness or accident, you must still let your insurer know.

For more information, watch a video about Duty of Disclosure here.

If you’re not sure if you need to disclose something, call us on (02) 8268 2900 for a confidential chat. We’re always happy to help.