Your Duty of Disclosure
1. Consumer Insurance Products
Your Duty to take reasonable care not to make a misrepresentation
Your Duty
The law (Insurance Contracts Act 1984) requires you to take reasonable care not to make a misrepresentation to the insurer when you apply for, renew, extend or vary a consumer insurance contract.
Consumer insurance includes cover such as home, contents, motor, travel, personal accident, sickness, and other insurance obtained wholly or predominantly for personal, domestic or household purposes.
You must answer all questions from the insurer honestly, accurately and to the best of your knowledge. This includes information about you, other insured persons, and anyone who may benefit from the policy.
Consequences of failing to take reasonable care:
If you do not take reasonable care, the insurer may reduce or deny your claim, cancel your policy, or in serious cases, void the contract.
If you are unsure about how to answer a question, or whether something is relevant, please ask us for help.
2. All Other (Non-Consumer) Insurance Products
Your Duty of Disclosure (ICA ss21–21A)
When the duty applies
The duty of disclosure applies to commercial/business insurance.
Before you enter into, renew, extend or vary a non‑consumer insurance contract, you must tell the insurer anything you know, or could reasonably be expected to know, that may affect their decision to insure you and on what terms.
You have this duty until the insurer agrees to insure you.
You have the same duty before you renew, extend, vary, or reinstate an insurance contract.
Exceptions
You do not need to disclose information that:
- reduces the insurer’s risk
- is common knowledge
- the insurer already knows or ought to know
- the insurer has told you that you do not need to disclose.
Consequences of non-disclosure
If you do not comply with this duty, the insurer may reduce or deny a claim, cancel your policy, or in serious cases, void the contract.
If you are unsure whether something should be disclosed, please contact us for guidance.
Information You Provide to Us as Your Adviser
We rely on the information you provide to help us arrange insurance and give appropriate advice. Please ensure the information you give us is complete, accurate and up to date.
If you are acting on behalf of other insured parties (such as directors, partners, beneficiaries or employees), you must ensure they understand and comply with their disclosure obligations.
If anything changes during the policy period, or if you become aware of new information that may be relevant, please let us know as soon as possible.
Need Help?
We understand that disclosure obligations can be complex. If you have any questions about what you need to tell us or the insurer, we are here to assist. Contact your adviser or call us on 1300 721 132.
Our Financial Services Guide
Our financial services guide provides further information regarding our services, how we are remunerated and should be read in conjunction with our service agreement.
We are authorised to advise you about and arrange general insurance products. If we are either unable to advise you or act on your behalf due to a conflict of interest which cannot be managed, we will immediately notify you.
Other Important Information
Duty of Good Faith
Both parties to an insurance contract, the insurer and the insured, must act towards each other with the utmost good faith. If you fail to do so, the insurer may be able to cancel your insurance. If the insurer fails to do so, you may be able to sue the insurer.
Underinsurance
Underinsurance occurs when you have not insured the full repair or replacement value of your property/asset. If you are underinsured, your insurer may rely on any ‘Average’ or ‘Co-insurance’ clause in the insurance policy. This means you may not receive full compensation for your loss and would have to bear part of the loss yourself.
Reviewing the sums insured and declared values on a regular basis and at each renewal will help you to ensure that you have maximum protection under your policies.
You need to decide whether to increase the sums insured or declared values of insured property/assets, and whether you require replacement on a ‘new for old’ basis. It is also important to consider other costs such as removal of debris and any additional costs that may be required to replace the damaged property/asset. The value of the property/assets insured may need to be updated if you change locations, renovate or expand your premises, or purchase new property/assets (especially if your purchases are substantial).
In some cases, insured property (like a motor vehicle) may depreciate in value, or you may want to reduce the insured values to ensure that you are paying a competitive premium.
If you want to discuss whether insured property/asset values should be changed in your policies, please contact your Account Manager for assistance. If a change to the value of the property/assets insured under your policies is not notified to us, we cannot communicate these changes to the insurer.
Average or Co-Insurance
Some policies contain an Average clause. This means that if you insure for less than the full value of the property, your claim may be reduced in proportion to the amount of the under-insurance. These clauses are also called “Co-Insurance” clauses.
A simple example is as follows:
Full (Replacement) Value $1,000,000
Sum Insured $ 500,000
Therefore you would be self-insured for 50% of the Full Value.
Amount of Claim, say $ 100,000
Amount payable by Insurers as a result of the application of Average/Co-
Insurance, i.e. 50%, $ 50,000
Some Business Interruption policies contain an Average/Co-Insurance clause, but the calculation is different. Generally, the Rate of Gross Profit, Revenue or Rentals (as applicable) is applied to the Annual Turnover, Revenue or Rentals (as applicable) (after adjustment for business trends or other circumstances.
If you are in any doubt about whether and how Average/Co-Insurance clauses apply to your insurances, please contact your Account Manager for assistance.
Subrogation and/or Hold Harmless Agreements
You can prejudice your rights to claim under your insurance if you make any agreement with a third party that will prevent or limit the Insurer from recovering the loss from that party (or another party who would otherwise be liable). This can occur when you sign a contract containing an indemnity clause, “hold harmless” clause or a release – unless you obtain the Insurer’s consent in advance.
This is because some policies contain a ‘contractual liability exclusions’ that mean the Insurer can refuse to pay or reduce the amount it is liable to pay by the extent to which it is unable to recover from the third party. These exclusions are often found in public and products liability, broadform liability and professional indemnity policies.
Examples of such agreements are the “hold harmless” clauses which are often found in leases, in property management contracts, in maintenance or supply contracts from burglar alarm or fire protection installers and in repair contracts. Other contracts you sign from time to time relating to your business operations (e.g. supply agreements, equipment hire contracts, event hire contracts, labour hire contracts, subcontracts, design and construct contracts, consultancy agreements etc.) may contain indemnity clauses and releases which may trigger the operation of policy exclusions or breach the conditions of your insurance.
Do not sign a contract or lease without contacting your broker and/or taking legal advice as to whether the contract terms will prejudice your insurance protection under your policies. If you are in doubt or require further assistance, please consult your Account Manager.
Leasing, Hiring and Borrowing Property
When you lease, hire or borrow property, make sure that the contract clearly identifies who is responsible for insuring the property. This will help avoid arguments after a loss and ensure that any claims are efficiently processed.
Industrial Special Risks policies automatically cover property which you are responsible to insure, subject to the policy excess. The decision as to who should insure the property is not left to your discretion. You may have other insurance (for example, public liability) which may assist you meet claims relating to property damage or personal injury caused to or by property which you lease or hire. Please note, there is usually a sub-limit on the amount of claims that can be made for damage to property in your temporary cared, custody or control.
If the responsibility to insure lies with the owner, we recommend you try to ensure the lease or hire conditions waive any rights of recovery against you, even when the damage is due to your negligence. This will prevent the owner’s Insurer making a recovery against you.
If there are no conditions relating to responsibility to insure in the hire or lease contract, you should write to the owner asking who is to insure the property.
Un-named Parties
If you require a person to be named as a co-insured, a joint insured, an insured person or if you require the interest of a third party to be covered by your policy, you must request this in advance. Most policy conditions will not provide indemnity to other parties (e.g., mortgagees, lessors, principals etc) unless their interest is properly noted on the policy. Please note, while we can ask, we cannot guarantee that an insurer will accommodate a request to include a further party as an insured under your policy or to note the interests of another party on your policy.
If this is required under a contract or agreement, do not sign the contract without checking with us whether the insurer is prepared to include the other party as an insured or note that party’s interests. You should also be aware that it may not be in your best interests to make arrangements to have someone else insured under the terms of your policy. We can advise you about this.
If you would like assistance or guidance with the insurance requirements under a contract, please consult your Account Manager.
Insurance Placed With Unauthorised Foreign Insurers
If your risk is atypical or the insurance cannot reasonably be placed with an Australian authorised insurer, we may recommend that you insure with an unauthorised foreign insurer.
An unauthorised foreign insurer is an insurer that is not authorised under the Insurance Act 1973 (Act) to conduct insurance business in Australia and is not subject to the provisions of that Act, which establishes a system of financial supervision of general insurers in Australia that is monitored by the Australian Prudential Regulation Authority (APRA).
The insurer cannot be a declared general insurer for the purpose of Part VC of the Insurance Act 1973, and, if the insurer becomes insolvent, you will not be covered by the Federal Government’s Financial Claims Scheme provided under Part VC of that Act.
If we do recommend that you insure, vary or renew your insurance with an unauthorised foreign insure, we will tell you about that insurer and which policies we have placed with them.
You should consider whether you require further information regarding:
- The country in which the insurer is incorporated, and what scheme of financial supervision of insurers applies;
- The paid up capital of the insurer;
- The insurer’s rating by credit rating agencies;
- The insurer’s financial reports; and
- Which country’s laws will determine disputes in relation to the policy.
As your insurance broker, we do not warrant or guarantee the current or ongoing solvency or financial viability of the insurer because we have no control over the insurer’s performance and this can be affected by many complex commercial and economic factors. The solvency of an insurer can change significantly between the time an insurance contract is entered into and the time a claim may be made. If you have concerns about the insurer’s solvency you should review the insurer’s credit rating from time to time.
Claims Occurring Prior to Commencement
Your attention is drawn to the fact that most of your policies do not provide indemnity in respect of events that occurred before the insurance commenced. They cover events that occur during the time the policy is current.
Claims Made During the Period of Insurance
Some policies (for example, professional indemnity insurance) provide cover on a “claims made” basis.
This means that claims that are first advised to you (or made against you) and reported to your insurer during the period that the policy is current are insured under that policy, irrespective of when the incident causing the claim occurred (unless there is a date beyond which the policy does not cover – this is called a “retroactive date”).
If you become aware of circumstances which could give rise to a claim and notify the insurer during the period that the policy is current, a claim later arising out of those circumstances should also be covered by the policy that is current at the time of the notification, regardless of when the claim is actually made or when the incident causing the claim occurred.
In order to ensure that your entitlement to claim under the policy is protected, you must report all incidents that may give rise to a claim against you to the Insurers without delay after they come to your attention and before the policy expires.
Non Renewable Insurance
Cover under your policies terminates on the date shown in this Manual or as indicated in our tax invoice or adjustment note.
While insurers will send renewal offers for most insurance policies, there are some which are not “renewable”. For these, if you wish to effect similar insurance for a subsequent period, you will need to complete a further proposal before the current policy expires so that we can seek terms of insurance and quotations on your behalf.
Essential Reading of Policy Wording
The policy wordings for your insurances have either been provided to you or will be sent to you as soon as they are received from your Insurers. We recommend that you read these documents carefully as soon as possible and advise us in writing of any aspects which are not clear to you or if any aspect of the cover does not meet with your requirements.
