Insurance—duty of disclosure

The following Insurance & Reinsurance practice note provides comprehensive and up to date legal information covering:

  • Insurance—duty of disclosure
  • Duty of ‘fair presentation’
  • Divisibility of risk
  • Disclosure to insurance intermediaries
  • What is the effect of a failure to comply with the duty to make a fair presentation of the risk?
  • How is the materiality test applied?

Insuranceduty of disclosure

This Practice Note considers the duty of fair presentation under the Insurance Act 2015 (IA 2015), which applies to non-consumer policies. For practical guidance on the duty of disclosure under consumer policies, see Practice Note: A guide to the Consumer Insurance (Disclosure and Representations) Act 2012. For further information on all aspects of IA 2015, see Practice Note: Insurance Act 2015 (IA 2015)—essentials.

Duty of ‘fair presentation’

Under IA 2015, s 3, the insured has a duty to make a 'fair presentation' of the risk to the insurer. The duty of fair presentation consists of three distinct elements:

  1. disclosure: the insured must satisfy either the ‘primary’ or ‘secondary’ duty of disclosure:

    1. primary duty: the insured must disclose every 'material circumstance' which it 'knows or ought to know'. When deciding what an insured 'knows', it is the knowledge of those responsible for obtaining insurance on behalf of the insured or, alternatively, the senior management of the insured that is relevant. Further, an assured 'ought to know' something that would be revealed on a reasonable search of the relevant information being disclosed. What constitutes a reasonable search will depend on the size and type of business of the insured

    2. secondary duty: alternatively, the insured must provide 'sufficient information to put a prudent insurer on

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