The parties to an insurance contract all have a legal duty to disclose. All the material information must be disclosed. This sounds simple enough, however, this is not so in real life. This is evidenced by the fact that there is plethora of court cases that relate to the issue of non-disclosure. The substance of disputes in these cases vary: some cases pertain to instances where there has been no disclosure at all; sometimes, there has been some form of disclosure, albeit not full disclosure; even more common – are cases where the insured did not know whether it is relevant to disclose certain information; etc. Whilst most disputes have to do with non-disclosures at the commencement of a contract i.e., pre-contract stage, there may be instances where a dispute relates to a failure by the insured to disclose certain information during the subsistence of a contract. This then begs the question whether a duty to disclose ever ceases and, if it does, when does it cease. These are the questions which this piece purports to answer.
It is not unreasonable for the insured to think that once s/he has made disclosures during the pre-contract negotiations, s/he no longer owes any disclosure duties to the insurer. This is so unless the insured has specifically been told to disclose information, on a continuous basis, as and when the events occur. The point of departure in such cases is the policy wording. One has to have regard to the policy wording and ascertain whether there is a continuous disclosure provision in the policy wording, requiring the insured to disclose on an ongoing basis. In the absence of such a provision, there is no duty on the insured to disclose continuously. The opposite is also true that where there is such a provision, then the insured must disclose continuously. Critically, even where there is no such provision in the contract, the duty to disclose does not necessarily cease “for good”. This is because, at the renewal of a contract, it is incumbent upon the insured to disclose all the material events that may have occurred during the running of a preceding insurance contract. Where a new policy wording gets issued after the renewal, it becomes important for the insured to, once again, have regard to the terms of the policy to see whether there has been a change with regard to disclosure duties. Mostly, and particularly where there is an intermediary involved, such a crucial change would be communicated specifically to the insured.
Knowing whether there is a continuous duty to disclose is significant in any insurance contract, as failure to disclose, where there is a duty to do so, may lead to a repudiation at the claiming stage. Where there is a broker involved, the broker has a duty to point out to the insured that there is such a duty. Where there is no broker, it is necessary for the insured to confirm with his/her insurer as to the position in this regard.