Full disclosure: your responsibility as an insurance customer

When it comes to business, household and vehicle insurance, we all expect the insurer to be clear and honest in what it is covering, and to pay out in the event of a claim. But what about the customer? What responsibility do insurance clients bear in this process?

A core tenet of insurance, for both insurers and customers, is that of full disclosure. According to this principle you as the insured must inform your insurer when applying for insurance of anything unusual, unique or specific to your business property, home or home contents, or vehicle.

This would include an accurate description of the current state of the property, contents or vehicle; known faults or defects; or any aspect that may adversely affect your risk level.

This is critical because these aspects - called material facts - have a direct impact on your risk profile. This in turn influences the insurer's decision-making process regarding the extent of your risk and associated cover and as a result, your monthly premium.

Knowingly withholding information from your insurer when taking out a policy can have the following outcomes:

1. You could find yourself under-insured when the time comes to claim, and your full claim will not be settled.
2. Where your insurer proves that you withheld information, it could reject your current claim as well as future claims.
3. Where your insurer proves that you were dishonest in declaring your information for assessment and therefore the cover offered, the insurer can nullify the contract. This is tantamount to the contract never having existed at all.

Giving false information or not fully disclosing all the information you know when taking out a new policy is fraud, and is taken seriously by insurers.

While most cases are fairly straight forward and potential customers need to just be honest in their assessments, other cases are more complex and customers would do well to work with a broker to ensure all information is clearly and correctly stated.

To ensure full disclosure and that you're fully compliant with expectations from your insurer, remember these tips:

1. Gather all necessary information: before contacting your insurer, gather all necessary paperwork to answer all your insurer's questions correctly. For example, have an accurate idea of the scope of your home contents and have your vehicle's model and year of manufacture details handy.
2. Be honest: answer all your insurers questions honestly, and add any information that you think could change the cover that your insurer provides, even if they don't specifically ask for it.
3. Get help: if you need assistance from your broker, as them for input ahead of time or to assist you with any specific questions where you're battling to provide accurate answers.

The rules around full disclosure also apply if you are changing your policy from the original contract you took out.

Insurance is a two-way partnership, and relies on your honest declaration in requesting cover as much as it relies on your insurer's transparency in providing it.