Dear All,
I feel it is important to share with you on the duty of disclosure when buying an insurance policy. I will also restate some of the points of law regarding disclosure of material fact in insurance.
A fact is material if it will influence a prudent (reasonable) underwriter in deciding whether to accept a business and in what terms. In some instances, the insurer would be able to repudiate liability due to non-disclosure by the insured or avoid the contrac altogether.
Why does the law impose the duty of disclosure in insurance contracts but not in other types of contracts? (I want to believe you still remember). Well, a quick answer to that is while the subject matter of other contracts can be seen & inspected by all parties, the subject matter of insurance is best known by the proposer and should therefore demonstrate uthmost good faith (uberrima fides) in dealing with the insurer. Other contracts (including insurance) can be affected by misrepresentation but only insurance is subject to disclosure requirement.
while other contracts are governed by the legal maxim 'caveat emptor', insurance is based on 'uberrimae fides'.
Below is the full guide.
http://www.insurancehound.co.uk/download/airmic-guide-disclosure-material-information-business-insurance-14585?EDID=QNJ3251-V14HW-KQ9Y8O-ED1ZB-2CH91-v1
