Duty of Disclosure
Some Important Things You Need to Know
It is essential that you carefully read and understand the following important notices. If you have any questions, please ask us.
Your Duty of Disclosure
Under the Insurance Contracts Act 1984 you have a Duty of Disclosure (Duty). A different Duty applies depending on the type of insurance contract i.e. contracts predominately used for personal, domestic or household use (“consumer contracts”) or other non-consumer contracts (e.g. commercial / business use policies). It is the use of the policy that is the determining factor in which Duty will apply.
As a general guide, we have provided the below information to highlight the nature of these different duties however please read the PDS/Policy wording for the applicable Duty and if you are not sure, please ask your broker.
Policies for personal, domestic or household use
Consumer contracts e.g. motor, home building and contents, travel, sickness & accident, consumer credit or any other policy intended for use by a consumer
You have a duty to take reasonable care not to make a misrepresentation to the insurer, before you enter the policy as well as before you renew, extend, vary or reinstate the policy. Before you do these things, you may be asked questions, the answers to which the insurer will use in deciding whether to insure you, or anyone else to be insured under the policy, and on what terms. You must answer these questions truthfully, accurately and completely.
All other insurances
Non-consumer contracts e.g. policies for use in a business
Before you enter an insurance contract, you have a duty to tell the insurer anything that you know, or could reasonably be expected to know, may affect their decision to insure you and on what terms. You have this duty until the insurer agrees to insure you. You have the same duty before you renew, extend, vary or reinstate any insurance contract.
You do not need to tell the insurer anything that:
- reduces the risk they insure you for; or
- is common knowledge; or
- they know or should know as an insurer; or
- they waive your duty to tell them about.
Important for ALL insurance contracts
If you do not tell the insurer something you are required to, they may cancel your contract or reduce the amount they will pay you if you make a claim, or both. If your failure to tell them is fraudulent, they may refuse to pay a claim and treat the contract as if it never existed.
Hold Harmless Agreements – Some insurance policies contain provisions that either exclude or reduce the insurer’s liability for a claim if you waive or limit your rights to recover damages from another party in relation to any loss. You may prejudice your rights with regard to a claim if, without the prior agreement from your insurers, you make any agreement with a third party that will prevent the insurer from recovering the loss from that, or another party. If you have such agreements, we may be able to negotiate with the insurer to permit them and therefore please advise RiskCorp accordingly.
Change of Risk or Circumstances – You should carefully monitor and review that your insurance contract is adequate to cover your assets or business activities and seek a variation if it is not. Many policies require us to notify the insurer in writing of certain changes to the insured risk during the period of insurance. The insurer can then decide to cover the new risk. Examples are:
- For insurance covering property location changes, new business activities or any significant departure from your normal business
operations; and - For insurance covering your liability to third parties changes to the nature of your business, and specifically in products liability, changes
to your product range or your involvement in products not previously notified to insurers.
In order to ensure proper protection, please ask us if you are in doubt as to whether an insurer should or should not be told of certain changes.
Interest of Other Parties – Many policies exclude cover for an interest in the insured property held by someone other than the insured, unless that interest is specifically noted in the policy. For example, if property is jointly owned, or subject to finance, the interest of a third party such as the joint owner or financier may be excluded if it is not specifically noted on the policy. If you want the interest of any third party to be covered, please let us know, so that we can ask the insurer to note that party’s interest on the policy.
Utmost good faith – Every contract of insurance is subject to the doctrine of utmost good faith which requires that the parties to the contract should act toward each other with the utmost good faith. Failure to do so on your part may prejudice any claim or the continuation of cover provided by the insurer.
Subrogation and Right of Recovery – You are warned that should you become a party to any agreement that has the effect of excluding or limiting your underwriter’s ability to recover from a third party, your underwriters may have the right to refuse to indemnify you for such loss where it is shown that your underwriter’s rights of recovery have been prejudiced by your action. Further, it is a condition of an insurance contract that you may not forego any right of recovery that may exist against another party without prior written approval being given by the underwriter.
Average or Co-insurance – Some insurance contracts require you to bear a proportion of each loss or claim if the sum insured is inadequate to cover the amount of the loss. These provisions are called ‘average’ or ‘co-insurance’ clauses. If you do not want to bear a proportion of any loss, when you arrange or renew your contract of insurance, you must ensure that the amount for which you insure is adequate to cover the full potential of any loss. If you insure on a new for old basis, the sum insured must be sufficient to cover the new replacement cost of the property.
This means that if the sum insured you nominate for buildings, plant, machinery, stock is less than 100% (normally below 80 or 85% depending on the policy) of its value (100% for Business Interruption/Consequential Loss) at the time the insurance was effected (or renewed), then part of the loss will/may not be covered by the policy.
For example a policy with a 100 % co-insurance clause pays as follows: if a building is insured for $150,000 when its value is $200,000, then in the event of a claim for damage of $100,000, underwriters will only pay $75,000 and you will be your own underwriter for the balance.
Wholesale Broker information – In some cases we use the services of a Wholesale Broker or Underwriting Agent (insurance intermediary) to access products that are not available to us directly from the insurer. You can identify where we have used an insurance intermediary as the Tax Invoice and Schedule will show that the policy is placed via another insurance intermediary.
This situation usually arises where the insurance intermediary has developed a specialised product and competitive pricing for risks that are not commonly available directly from most underwriters. This means we are not dealing with the end insurer directly via the insurance intermediary. All insurance intermediaries that we deal with are required to hold an Australian Financial Services Licence and to place all client funds received into a Trust Account and are required to meet the same high standards in the delivery of their services that apply to us. Importantly, all claims will be the ultimate responsibility of and paid for by the end underwriter.
Misstatement of Premium – We try to tell you the correct amounts of premium and statutory and other charges that apply to your insurance. In the event that we misstate that amount (either because we have made an unintentional error or because a third party has misstated the amount), we reserve the right to correct the amount. Where permitted by law, you shall not hold us responsible for any loss that you may suffer as a result of any such misstatement.
Claims occurring prior to commencement – Your attention is drawn to the fact that your policies do not provide indemnity in respect of events that occurred PRIOR to commencement of the contract.
“Claims made” vs “Losses Occurring” policies – Most policies such as public liability policies are said to be “losses occurring” policies as a claim may be made in respect of a loss or accident which occurs during the period of the insurance. Where a policy such as a Directors and Officers Liability policy or Professional Indemnity policy is arranged on a “claims made” basis, claims first made against you AND reported to the insurer during the period of insurance are covered irrespective of when the act causing the claim occurred, subject to the provision of any clause/s relating to a “retroactive date”. Additionally, if you become aware of facts that may give rise to a claim, and you give written notice to the insurer of those facts as soon as possible (and before the policy period expires) then the insurer may not deny liability for that claim, when made, solely because it was made after the expiry of the policy period. For this reason, you must advise the insurer in writing of all incidents that may give rise to a claim against you without delay after such incidents come to your attention and prior to the policy’s expiry date.
Electronic Delivery of Information
Please note that where possible we prefer to provide all correspondence and disclosure notices (including the FSG and PDS/Policy Wordings) to you electronically, via email attachments or links in an email (which if selected will provide a download of the document for your records). If you have provided your email address to us we will typically use that email address for all correspondence and disclosure notices. Should you not wish to be sent disclosure documents electronically please advise us accordingly and we will update our records.
Privacy Notice – We are committed to protecting your privacy. We use the information you provide to advise about and assist with your insurance needs, including premium funding and claims assistance.
We provide your information to insurance companies and agents that provide insurance quotes and offer insurance terms to you, companies that deal with your insurance claim (such as loss assessors & claims administrators) and premium funding offers and terms. We may also need to provide your information to contractors who supply services to us; however we will take reasonable measures to ensure that they protect your information as required under the Privacy Act 1988.
Your information may also be given to an overseas insurer (like Lloyd’s of London) if we are seeking insurance terms from an overseas insurer, or to reinsurers who are located overseas. We will try to tell you where those companies are located at the time of advising you. We may also disclose information to the providers of our policy administration and broking systems who may be supported and maintained by organisations in New Zealand, the Philippines and Vietnam. Please note that the Privacy Act may not apply to these organisations.
We do not trade, rent or sell your information. If you don’t provide us with full information, we can’t properly advise you, seek insurance terms for you, or assist with claims and you could breach your Duty of Disclosure. For more information ask us for a copy of our Privacy Policy or visit our website at www.riskcorpinsurance.com.au.
By asking us to assist with your insurance needs, you consent to the collection and use of the information you have provided to us for the purposes described above.