Insurance Act 2015

Duty of Fair Presentation - an explanation

Your Insurers have assessed and accepted your risks on the basis of the information given to us by you. Should this information be inaccurate, incomplete or have changed you should inform us immediately so that Insurers can be advised.

You and any Director responsible have a duty to provide a ‘fair representation of the risk’ to Insurers. This means that you have a duty to disclose facts about the risk which are material to a prudent Insurer.

The consequences of you breaching your duty of fair presentation to Insurers can be serious and Insurers can apply various remedies.

  • If the breach was deliberate or reckless the Insurer can void the contract from inception and can keep the premium.

  • If the breach was not deliberate or reckless then there are a number of options available to the Insurer if they wish to impose a remedy. More than one remedy can be applied:

  • If the Insurer would not have underwritten your risk if they had known the information which has come to light, then it can void the contract but has to repay the premium.

  • If the Insurer would have charged a higher premium, then it can proportionally reduce any claims payments.

  • If the Insurer would have included new terms or imposed different terms other than in respect of premiums such as conditions or warranties, exclusions, different extensions, sub limits etc. the contract is to be treated as if it had been entered into on those terms.

Typically, information that needs to be disclosed to Insurers is information that: -

  • is not in the public domain

  • is not already held by your Insurer

  • is not easily accessible by your Insurer or is not common knowledge or is information that Insurers would not reasonably have been expected to know.

The information you provided is included within your Statement of Fact. Any changes to those statements should be disclosed along with:

  • Changes in your business activities, any work t hazardous locations, any other work carried out of a hazardous nature, extraneous duties.

  • Acquisition of new premises, alteration or addition to existing buildings or plant. Change in the type, quality or storage of dangerous goods, alteration or discontinuing of fire or security protection system. Change of use of neighbouring premises or joint occupants if of a hazardous nature.

  • Investigation or prosecution by any Government organisation including HSE, HMRC, strategy or regulatory bodies.

  • Acquisition of or merger or joint venture with other companies or firms or changes in shareholdings.

  • Any financial irregularity, dissolved or insolvent businesses either currently or in the past that owners, directors or buyers of insurance within your business have been party to.

This list is by no means exhaustive and if in doubt refer to Darwin Clayton (UK) Limited. If there are any long term plans being considered it may also be beneficial to involve us at an early stage so that we can at least comment on the likely effect on existing covers and make suggestions to minimise the cost of future Insurances.

At Darwin Clayton we will send you a Statement of Fact when we arrange a contract of Insurance for you or renew your Policy or any mid-term alteration. We would ask you to check these carefully and bring to our attention anything which is not clear or correct.