Why you really need to bare all
Think you’re protected because you’ve been paying premiums for years? You’re not … if you failed in your duty of insurance disclosure.
Most insurance claims are paid. This is shown by the industry’s results: net profits are often less than investment income. In other words, the cost of paying claims plus general business expenses is often greater than premiums earned (with investment income making up the difference).
When insurers do deny a claim it’s usually the policy owner failed to disclose to the insurer important things that are essential for underwriting.
So don’t get caught in the worst of both worlds – having paid premiums for years then your insurance company refuses to pay when you, or your loved ones, need it.
Important Things to Note About Duty of Disclosure
It’s tempting to leave something out, just in case it might make it more difficult to get insurance, or because it might make the policy more expensive but there are a few things you need to know about your duty of disclosure.
- An applicant for insurance has a legal duty to disclose important information relevant to the insurer to make reasonable decisions about approving the insurance application
- If the applicant fails to make the required disclosures, the insurer might have grounds to reject a claim in part or in whole (reduce the amount of payout or deny the claim) even if they’ve been receiving your premiums for years.
- This remains the case even if medical conditions have resolved, or are being properly managed, or there are no obvious injuries that are a result of an accident.
- Most insurance applications give the insurer authorisation to access the insured’s medical records — at any time.
- It is common knowledge that most insurance providers make their decision to insure a person even without the need to assess and check applicants’ disclosures at the time insurance is taken out. Instead, they will do so in determining a claim. So if you don’t disclose something and the insurer issues you a policy, you are not in the clear because your insurance contract might have been drafted using false information.
- Insurers sometimes seek to void a death benefit even if the cause of death is not directly related to the non-disclosure, and in the case of death benefit claims it commonly falls to grieving beneficiaries to contest denied claims.
Now is the Time
If you have a policy and you’re worried you may have missed telling them something, don’t wait to make a claim to discover you aren’t covered.
If you are in any doubt whatsoever, disclose it now, in writing, and ask for a response in writing. Make sure you keep records of all communications with the insurer and broker (if any). And keep beneficiaries informed.
It’s not just life insurance
The duty of disclosure applies to all types of insurance.
Whether it’s your car, your house, your phone, or even your pet, you aren’t protected if you held back information that might be relevant.
If there’s a problem, find out up front, before you pay away all those premiums… rather than when it’s too late and you have a claim denied.
Remember, a company will agree to insure you in confidence that all information you have presented is in good faith.
So it is aso your duty to provide factual and accurate information during the application process.
What Are Your Thoughts?
Do you have any doubts about your insurance cover? Is there anything else you’d like to know about insurance and your duty of disclosure, or about insurance more generally?
Join the conversation — leave a comment below and let us know what you’re thoughts are.