Disclosure of all the facts
1st November 2012
Duty of Disclosure
Are you aware of yourresponsibility to disclose what is considered ‘material’ information inrelation to your Insurances? What is material information maybe a grey areabut can be summarised as "any information that may affect an insurer’s decisionon whether to accept a risk and if so, what terms to apply”. If in doubt about something then it should bedisclosed.
Most people understand that amotoring conviction should be disclosed for their motor insurance but they areunaware of the relevance of disclosing, for example a County Court Judgement (CCJ)or Bankruptcy. Many insurers will notprovide cover if you have a CCJ, or if you have been made bankrupt and it istherefore extremely important that this information is disclosed atoutset. If anything should happen duringthe course of the insurance then it should be disclosed as soon as practicalbut at the very least, at the first renewal after the event.
Trees in the Vicinity?
You also need to disclose on ahousehold policy for example, details of trees within a certain vicinity ofyour property. Some insurers will issuea questionnaire asking for details of trees and shrubs but if you have whatwould be considered a large tree or shurb within a certain distance of yourproperty then it should be disclosed (for example NIG quote trees over 20ftwithin 30ft of the premises). Again, ifin doubt please disclose.
To pick an example, we are awareof a situation where the insured was diligent in notifying the insurers of alarge oak tree in front of the property. However, what they failed to disclose was some Leylandii trees whichwere only a matter of yards away from the property on the other side of thefence in a neighbouring garden. Becausethey were not in the insured’s own garden, they did not see the relevance ofthese being disclosed. Leylandii, whichare notorious for causing problems with their roots, caused a subsidenceproblem on the property and their non-disclosure created a problem with theclaim.
Just because you disclosesomething does not mean that insurers will decline to insure. It gives them all the information that theyneed on which to make a decision as to whether they will accept the risk and ifso, at what premium and if any terms are to apply. For example, it might be that they will imposea higher excess or ask that trees are regularly lopped.
Statement of Fact & theInternet
One of the problems withdisclosure is that many insurers these days do not ask for a proposal form tobe completed and operate on what is called a Statement of Fact. This is a document sent to you from theinsurer setting out all the information that has been disclosed but does notask for a copy to be signed and returned. As such, the importance of this document maybe overlooked. With the increase of arranging insurance viathe internet, this has also created a problem in that it is now easy for peopleto arrange insurance for somebody else without the insured person beingpresent. For instance, the son ordaughter might be arranging insurance for parents and may make certainassumptions about things, without checking to see that they are correct.
Just to reiterate, our advice isthat if you are unsure about whether anything should be disclosed, then pleasetalk to us about it. We will let youknow if it is something that should be disclosed and any impact on yourinsurance.
Adequacy of Sums Insured
A number of home insurancepolicies these days have standard limits for buildings and contents sumsinsured. For example, a building suminsured of £500,000 and contents of £50,000. For many people these sums insured may be well in excess of therebuilding or replacement cost. However,many people still specify the sum insured which is particularly relevant to PersonalEffects (items away from the home) and items such as gold, silver, antiques andworks of art.
If you are not adequately insuredthen in the event of a claim you may find that your insurer reduces the amountthat they pay you.
We can assist you in trying toestablish the correct sums insured by providing a check list which gives you aroom by room guide to work out the correct sums insured. We can also arrange for a professionalvaluation to be carried out, although this will sometimes come at an additionalcost to you but sometimes the cost is worthwhile if it gives you peace of mindthat you are correctly insured.
Gold Silver & PreciousMetals
The other thing to be mindful ofis the increase in values and this is particularly relevant to precious metals,such as gold and silver. The price ofgold and silver has increased dramatically over the last few years and you needto make sure that you regularly revalue these items and increase the sumsinsured accordingly. It maybe an expensefor you every few years to get all these items re-valued but in the long runthis could prove very beneficial, particularly in the event of a claim.
We can give you some guidance inmaking sure you are correctly insured, so if in doubt, please ask. Alternatively we can make arrangements for aprofessional valuation.