Non-disclosure /misrepresentation

Over 10% of all cases dealt with by IOS relate to issues of non-disclosure or misrepresentation. In the process, we have encountered many very tough and heartbreaking results due to the fact the great majority of the population are unaware of the obligation which most, but not all, insurers impose on policyholders to make disclosure, not only when the policy begins but on renewal, variation or reinstatement of the policy. Fortunately, most policyholders treat a renewal notice similar to a gas bill as the sad story below demonstrates.

Sue was a busy person who tried to pay her bills on time. When her insurance renewal fell due, after grumbling about how much the premium had increased, she saw that payment was due in a week and telephoned the insurance company and paid the bill by credit card. The renewal was a three-page document and she did not notice on page 2, she was asked a series of questions in relation to her driving and accident history over the preceding 12 months.

Shortly after paying the premium, her vehicle was stolen and not recovered. In the course of investigating the claim, her insurance company asked her to obtain her driving history which she happily did but was aghast to learn that, contrary to her recall, she had sustained two speeding fines shortly after paying the last renewal, one of which was for exceeding the speed limit by more than 20kph on the road near the local kindergarten where the limit was 40kph.

Sue was sure the insurance company would overlook these two minor matters – however its underwriting guidelines were such that they did not accept policyholders with more than four traffic offences sustained over a five-year period and these two offences, when added to three earlier ones sustained over the previous four years (most of which she had forgotten) meant she was an unacceptable risk. As the insurer established its underwriting guidelines would have applied in this instance, the Panel had no alternative but to find in favour of the insurance company.