Duty of Fair Presentation
The insured owes a duty to make a fair presentation of the risk to the insurer. It is a duty to make disclosure to the insurer of every material circumstance which the insured knows or ought to know after a reasonable search or disclosure which is sufficient to put the insurer on notice that it needs to make further enquiries for the purpose of revealing those material circumstances. In addition, the insured has a duty to disclose information in a clear and accessible manner.
A circumstance is material if it would influence a prudent insurer’s judgment in determining whether to take the risk and, if so, on what terms.
Failure to disclose a material circumstance may entitle an insurer to:
- in some circumstances, avoid the policy from inception and in this event any claims
- under the policy would not be paid;
- impose different terms on the cover; and/or
- reduce the amount of any claim payable.
This duty applies:
- before cover is placed;
- when it is renewed; and
- at any time that it is varied.
In addition to the premium payment condition, failure to comply with, or failure to comply within a specified time period with the terms of the policy, including any warranties, conditions or subjectivities applicable to the proposed cover may prejudice the validity of the insurance and claims may not be paid.