Insurance policies are physically nothing more than pieces of paper with text. However, a policy is a contract of insurance which is governed by UK law. There are certain duties on both parties to the contract, the policyholder or insured and the insurer or cover provider.
The duty of every person (including businesses) when seeking insurance (either at quote stage or at each annual renewal) is to provide every material fact.
The mere fact of answering questions (say in a proposal form) is not enough. If there is a fact which MAY be material then this should be declared, whether there is a specific question relating to this or not.
If an individual does not declare information, which is material, then a claim could be turned down. The individual will always have recourse to the insurance ombudsman if they feel the decision was unfair. ie they do not think the fact was material to whether the insurer would provide cover or not.
As far as businesses are concerned, stating material facts as part of their business insurance quote process is absolutely vital. To make it easier when providing a quote, certain assumptions are made by all brokers/insurers. However, the actual quote you receive should have a list of all of the assumptions that have been made.
If any of these are incorrect, you must let your broker/insurer know. In law, it will be assumed that you, the business owner, knew you had a legal right to disclose material information.
Pleading ignorance will not get a claim paid for. The only escape is if you can prove that the questioning and or proposal form was so confusing that you could not be sure what to declared.
The only option is, if in doubt declare it and if it is accepted, get your insurer/broker to confirm this in writing to you.
Tags: business insurance policies and the duty of disclosure