Accidents can happen, and whether it’s to cover a car, a home, or even our health, most Australians would have insurance in one form or another.

As a policyholder we have a duty of disclosure – that means we must let the insurer know any details about ourselves that could affect the type or costs of that cover. If you are asked a question, you have an obligation to answer it truthfully.

I often speak with people who have failed to disclose certain information – such as a criminal record or a medical condition – to their insurer and are concerned that they may be refused a claim.

If you are in this situation, here are 5 things you should know:

  1. If you made an innocent mistake by failing to disclose information, then the insurer still has to pay you what they would have insured you for had you made the disclosure. Unless you have deliberately mislead the insurer.
  2. If the insurer can prove that you deliberately attempted to mislead or conceal something from them, they may avoid paying out on the policy. In this case, it arguably should return the premiums paid by you.
  3. If the insurer is unable to prove that you deliberately mislead them then they could only avoid making a payment under the claim if it could argue that had they known the true facts, they would never have entered into a contract of insurance with you.
  4. If the insurer’s records indicate that they may have given you insurance on other terms, had they been given full disclosure, then the insurer may be required to pay out on the policy, on the terms they would have insured you had full disclosure been made.
  5. If you were not asked about specific information, you may still have been obligated to raise the matter with the insurer if you knew or ought to have known that it was relevant. Typically, we would expect a Court or Regulator to decide if you should have normally been aware.

If you are not happy with the decision made by the insurer, you have the right to appeal to the Financial Ombudsman Service. As this legislation is complex, I would advise anyone in this situation to seek legal advice as soon as possible.

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