Duty of Disclosure

The principle of the duty to disclose is closely related to the common law principle of utmost good faith and the requirement on the insured to always be honest and accurate in the information he or she gives to the insurance company.

Disclosure of all material facts
The law imposes two separate duties on the insured. One is the disclosure of all material facts. This is a positive duty on the insured both at the time of applying for an insurance and on any subsequent renewals, to disclose to an insurance company any information that may be material. This duty exists regardless of whether there are specific questions asked on that topic.

Misstatements
The other duty imposed on the insured is not to make any misstatements. In other words, everything that is said must be correct. If any statement made to the insurance company on application or renewal is materially incorrect, the insurance company can avoid the policy.

The Law Commission has recently suggested changes to this rule so that an insured need only disclose what a reasonable person would believe is material. However, this is not law yet.

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