Potential policyholders (proposers) have a duty of disclosure when taking out an insurance policy.
‘It is an implied condition in all contracts of insurance that the proposer shall make a full and complete disclosure to the insurer of all material facts relating to the risk to be insured’.
Anything concealed is considered fraud and you cannot escape the consequences by claiming you did not know what was material. On a property policy some examples of material facts are:
- A thatched roof – this must be disclosed because it has a higher fire risk.
- A flat roof or percentage of same must be disclosed as it has a higher risk of leaking in stormy conditions
- Claims history – previous claims must be disclosed within a certain time period usually 5 years.
- Properties in areas of flooding or subsidence must be disclosed.
There are certain facts which a proposer need not disclose
- Facts already know by to insures.
- Facts which tend to lessen the risk etc.
Some years ago we were acting for a client who owned a commercial shop with apartments. There had been a break in 6 months previously and some toilets and bathroom fitting were maliciously damaged. Just as this claim settled there was a fire in the apartments and we were asked to assess the fire.
Insurers declined the fire claim for two reasons
- They claimed that they were unaware of the apartments being unoccupied.
- They were never advised about the shop changing use from a carpet shop to an African foodstuffs shop.
We wrote back and agued that’s these two facts didn’t need to be disclosed. As Insurers were aware of the malicious damage claim deeming the apartments uninhabitable, it should have been no surprise that the apartments were unoccupied. Even though the first claim had just settled there wasn’t enough time to carry out repairs and find new tenants. On the second fact that Carpets are a higher fire risk than African foodstuffs then the risk was lessened and didn’t need to be disclosed. Our argument was successful and the second fire claim was also paid.
If you have damage as a result of a fire, have it professionally assessed. In Property Claims Loss Assessors Ltd we are Engineers and Building Surveyors with over 20 years’ experience. Knowing where smoke can go e.g. electrical boxes and conduits, behind skirting boards etc. and how to professionally clean everything is always a normal part of our assessment. We always advise clients after a fire to never start repairs until all the smoke damage is cleaned and certified. In addition to fire damage we also cover damage from pipe leaks, storm, flood, subsidence, break-ins, etc. Our first survey is free and we are a ‘no win no fee’ company.
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