What do I have to tell my insurer?
This information enables the insurance company to assess any additional risk of claiming that you may present compared to the general population. The information you provide on the application will form the basis on which the contract of insurance is based. It is therefore extremely important that the information you provide is truthful, complete and correct.
The consequences of not providing information that is truthful, complete and correct are potentially very serious. This article is designed to help you understand what is required of you and what those potential consequences might be.
What you must tell the insurer
It is not possible to list here all of the information you should tell the company. However, you must tell the company everything that may affect its decision to insure you. If the information, which you did not give the company, may have meant it would have placed an exclusion on the policy, charged a higher excess on claims, or asked you to pay higher premiums, then you should have given the information to the company.
Legally, you have a duty to give this information freely, rather than the company having to specifically ask you for it. This is referred to as the ‘duty of disclosure’. You have a duty to give the company all the information it needs to know when deciding if it can offer you insurance. If you do not disclose all material information, the company is entitled to avoid the policy and decline to consider your claim.
Companies ask a range of questions in an insurance application to help obtain all of the relevant information. However, your duty to give the company all the information it requires is not necessarily limited to the questions the company asks you on the application. You may not know or understand what sort of information the company might want to know, so if in doubt, tell the company everything.
When you must tell the insurer
You have a duty to give the company all the information it requires when you take out the policy, and every time you seek to increase, change, or add additional covers.
Life insurance, income protection, trauma, disability income protection, and health insurance policies also require you to tell the company about anything that may happen between completing your application and the insurance cover starting.
This means if you visit the doctor, develop a health problem, have a change in financial circumstances, or your situation changes in some other way between completing the application and your insurance cover starting, you must tell the company.
What happens if you don’t disclose something
The results of failing to give the company information that would have affected its decision to offer you insurance cover and on what terms are very serious.
Essentially, your policy could be ‘avoided’, which means it is treated as though it never existed. This is a common law remedy available to the company in certain circumstances.
If your policy is avoided, it could also affect other claims you might have made under the policy and the success of any future insurance claims and applications.
What if you forgot or didn’t mean to leave it out?
Under the current law, there is generally no distinction between innocent or deliberate non disclosure. This means that, even if you left out the information on the application by accident or unintentionally, the company can still decline your claim, make changes to your policy, or avoid your policy.
What if you told your adviser but it wasn’t on the form?
The company can avoid the policy and decline to consider the claim. This is because, even when your adviser writes the answers on the application on your behalf, you are still expected to read the answers and sign a statement declaring all the information is correct.
Due to the serious consequences of non disclosure, it is really important when someone else completes the application for you, that you check to see the answers are correct and no information has been left out.
Why it often comes up at claim time
Often the company will only find out that you did not give all the information it required when you come to make a claim. That is when the company asks you more questions or checks up on your history. This can lead to the company finding out about information it should have been given when you applied for insurance.
Giving incorrect information at claim time
Yes, if the policy allows the company to do so. Usually, a policy will state that you must not give incorrect or false information when making a claim. If you do, depending on the wording of the policy, the company may decline your claim or even cancel your policy. It can also affect any future insurance applications you make. However, even if the policy does not specifically state that you must not give the company incorrect or false information, the company may still be able to rely on common law to decline your claim.
The consequences of making false statements to the company when you make a claim are very serious, so you must be sure all the information you give to the company is truthful and correct. Remember, if you don’t know the answer to a question the company or an investigator asks you or you cannot remember, you should let them know that you will get back to them with the right information.
What if the missing information isn’t related to the claim?
Non disclosure, although often an issue when a claim is made, relates to the time when the insurance was taken out. Therefore, even though the information does not relate to the claim, if the company would have altered the terms of the cover it offered you when the insurance was arranged, (had it known about the information), it is entitled to avoid your policy and decline to consider your claim.
Can the insurer make me repay an earlier claim?
Yes, the company is entitled to recover the amount paid because, by avoiding the policy from its commencement, it is treating the policy as though it never existed.
How the rules are changing
The Contracts of Insurance Act 2024 changes these rules for consumer insurance from 15 November 2027. The duty of disclosure will be replaced by a duty to take reasonable care not to make a misrepresentation. Until then, the rules above apply.
How Finsol can help
We help you complete every application fully and accurately, so your cover holds up when you need to claim. Read our guide to getting the most out of your health insurance too. Call us on 0800 346 765 or book a free consultation.
Finsol is a financial advisory business founded in Hawke’s Bay in 2010, looking after more than 6,000 clients across New Zealand. This article is general information only and does not take your personal circumstances into account.
