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- Duty of Disclosure
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Duty of Disclosure
You must be aware of the duty of disclosure in relation to insurance and the severe consequences of its breach.The duty of disclosure under English law is a duty to pass on to the Underwriter(s), all material information relating to the risk under consideration. "Material" in this context refers to all information which a prudent Underwriter (not necessarily the Underwriter in question), would wish to take account of when considering whether or not to accept the risk, and if so, upon what terms and at what price. Material information does not necessarily have to actually increase the risk.
The duty of disclosure continues up until the insurance has been concluded and "resurrects" in the event of any amendment to the risk during the policy period or any extension/renewal. It may also be that the terms of the policy include specific ongoing disclosure conditions or warranties which effectively extend the duty of disclosure post inception of the policy.
In completing a proposal or claim form or any other material document relating to an insurance policy and in providing information to or for Underwriters, the accuracy and completeness of all answers, statements and/or information is the policyholder's own responsibility and it is of paramount importance that all relevant information is provided and that it is accurate.
In the event that there is a breach of the duty of disclosure, the Underwriter has the right to avoid the insurance from its commencement. Under such circumstances, the Underwriter(s) would be entitled to seek recovery of any claims already paid by them under the insurance, although at the same time the Underwriter(s) would generally be obliged to return paid premia (in the absence of dishonest conduct).
The duty of disclosure and the consequences of its breach may vary to a limited degree from the foregoing, dependent upon the law(s) of which country are applicable to the insurance.
If you are in any doubt as to the ambit of the duty of disclosure or whether a piece of information ought to be disclosed, please do not hesitate to contact us.