We have recently seen an increase in insurance claims being questioned, declined or reduced due to non-disclosure. There have also been plenty of decisions lately by the Australian Financial Complaints Authority (AFCA) that have come down in favour of insurers when clients have not disclosed full information.

It is important that you provide that information to your broker at inception, renewal or when endorsing (Changing) a policy.

As an example, an underwriter or insurer might ask questions that are quite broad. In the disclosure question (which applies to the whole policy) they might ask for traffic convictions and/or licence suspensions in the past three years. They also ask for all criminal charges or convictions within a five year period to be declared.

When insuring a passenger vehicle or utility, you are also required to declare drivers and their driving history (with no time frame declared). You, therefore, are required to declare all traffic infringements (no time frame).

If these convictions or infringements are not declared then the underwriter is entitled to avoid the risk or reduce their exposure in accordance with what they would have done had the information been disclosed. Obviously, any inconsistencies in an underwriter’s approach would work in your favour but again, it is better to be having these discussions at inception rather than claims time.

This is not bashing any particular underwriter but an example that highlights how clients (and brokers) can be exposed by inadvertent or deliberate non-disclosure. All underwriters have disclosure requirements and as the insurance market continues to get tougher, they will continue to enforce claims conditions.

So, what is best practice?

3 Tips to ensure best practice:

1. At inception, get all drivers’ declarations completed and signed, along with a printout of each driver’s record if at all possible. Declare any criminal charges or convictions.
2. At renewal, update the regular drivers and all driver’s histories. declare any changes with their criminal charges or convictions.
3. At endorsement (changes) time, advise if there are any changes in drivers and/or driving and/or criminal history.

If in doubt, declare it and let the underwriter make the decision.