Non-disclosure of claims – the risks

When we provide new and renewal quotations as part of our underwriting process, we will always ask about past and ongoing claims, and for good reason.

It is important that your company fully discloses all prior and ongoing claims to us (or any other prospective insurer) as it is a requirement under a piece of legislation known as the Insurance Act, which not only requires that all policyholders must provide a “fair presentation” of the risk they are asking insurers to cover, but also sets out the remedies available to insurers in the event of ‘non-disclosure’.

What is a Fair Presentation?

A “fair presentation” is broadly defined as a disclosure of all material circumstances, with material circumstances being any information that could influence an insurer’s decision on acceptance of the risk, the cover offered, and the premium charged.

Prior and ongoing claims forms an important part of this underwriting decision-making process and failure to disclose claims can have significant consequences, including:

1. Insurers may have the right to avoid the policy entirely. This means the insurer could treat the policy as if it never existed, leaving your business without cover and your business in breach of its contractual obligations.
2. The insurer might proportionately reduce the pay-out on a claim if they believe it would have charged a higher premium or applied different terms had the information been disclosed.
3. In cases where non-disclosure is not deemed fraudulent but rather careless, the insurer might still avoid parts of the policy, applying the terms they would have originally imposed.

With the consequences of non-disclosure being determined by the insurer at the time, it is crucial to ensure that we (or any other provider) are fully aware of any ongoing claims and therefore avoid any of the remedies above being applied.

Compliance with the Insurance Act will only ever result in accurate pricing, a smooth claims journey, and peace of mind.

Best practice

At COHIBL, we are frequently asked what is notifiable as a claim and we are committed to helping our clients navigate this (often complex- particularly when dealing with liability matters) issue.

Our team of experts are always available to guide you through the process and ensure that all necessary disclosures are made, so if you are unsure as to whether you should notify your insurance provider of a claim or circumstance that may later give rise to a claim, please do not hesitate to contact us.