They say I didn't tell them...
- What do I have to tell the company when I take out insurance?
- When do I have to give the company all this information?
- What happens if I don't give the company all of the information it wanted to know?
- Can the company make me pay back the money it paid on a previous claim, if it found out I didn't give it information when I took out the insurance?
- But what if I just forgot or didn't leave out the information on purpose?
- What happens if I gave my insurance broker/adviser the information, but it wasn't written on the application form?
- Why has the company only raised this as an issue now, when I have made a claim?
- What if the information I didn't give the company doesn't relate to my claim?
- How can I make sure my insurance policy is not avoided?
It is impossible to identify all of the information which you should tell the company. But, you must tell the company everything that may affect its decision to insure you. If the information, which you did not give the company, may have meant it would have placed an exclusion on the policy, charged a higher excess on claims, or asked you to pay higher premiums, then you should have given the information to the company.
Legally, you have a duty to give the company this information rather than the company having to specifically ask you for the information. This is referred to as the duty of disclosure.
Companies ask a range of questions in an insurance application to obtain all of the relevant information. But your duty to give information is not limited to the questions the company asks you on the application. Often, you may not know or understand what sort of information the company might want to know so, if in doubt, you should tell the company everything.
You have a duty to give the company all the information it requires when you take out the policy and every time the policy is renewed (this is every year for house, contents and vehicle insurance).
Life insurance, income protection and health insurance policies also require you to tell the company about anything which may happen between completing your application and the insurance cover starting. This means if you visit the doctor, develop a health problem, or your situation changes, between completing the application and your insurance cover starting, you must tell the company.
The results of failing to give the company information which would have affected its decision to offer you insurance cover and on what terms, are very serious. Your policy can be treated as though it never existed and the company can refuse to consider your claim.
When your policy is treated as though it never existed, it is called avoidance. If your policy is avoided, it can affect other claims which you might have made under the policy and the success of any future insurance applications. This is why it is really important to give the company all the information it may require.
Yes, the company is entitled to recover the amount paid because, by avoiding the policy from its commencement, it is treating the policy as though it never existed.
The current law does not make a distinction between innocent or deliberate non-disclosure. This means that, even if you left out the information on the application by accident or unintentionally, the company can still avoid your policy.
Usually, this still means the company can avoid the policy and decline to consider the claim. This is because, even when the adviser writes the answers on the application, you are asked to read the answers and sign a statement declaring all the information is correct.
It is really important when someone else completes the application for you, that you check to see the answers are correct and no information has been left out. This is because non-disclosure can have such serious consequences.
Usually the company will only find out that you did not give it the information when you make a claim.
Often when you make a claim, the company will ask you more questions or check up on your history. This can lead to the company finding out information which it should have been given when you applied for insurance.
Non-disclosure, although often an issue when a claim is made, relates to the time when the insurance was taken out and, in the case of fire and general insurance, at each renewal. Therefore, even though the information does not relate to the claim, if the company would have altered the terms of the cover it offered you when the insurance was arranged, had it known about the information, it is entitled to avoid your policy and decline to consider your claim.
The only way you can make sure that your policy will not be avoided is to give the company all the information it needs when you take out the insurance. If you did not give the company all the information you should have, you should tell the company immediately. For house, contents and vehicle insurance, if your circumstances or answers have changed since you took out the insurance, then you should tell the company at the next renewal - at the latest.