A recent Short Term Insurance Ombud case once again focusses the attention on the importance of disclosing material information at the start of the policy. The client was involved in a motor vehicle accident. Her claim was rejected by the insurer on the ground of her failure to disclose a cancellation of a previous policy due to fraud or dishonesty. As a consequence of the nondisclosure, the insurer further voided the policy and tendered a refund of premiums only.
The client’s argument was that she did not share the cancellation of a previous policy with the new insurer as the form did not specifically request it. However, OSTI’s view was that, although the proposal form did not specifically ask the client to disclose previous cancellations, under the heading ‘General Details’, the insurer provided that it was dependent on the insured providing true, correct and complete information and that all material information, whether asked or not, had to be disclosed.
The proposal form further contained a warranty, signed by the client, that all statements on all pages were true and correct and contained all information known to her which could affect the risks under the sections to be insured.
Therefore, the above wording created a clear duty on the client to disclose the information relating to the previous cancellation. As a result, OSTI upheld the insurer’s decision as it found that there was a material nondisclosure which entitled the insurer to reject the claim and void the policy.
Click here to read more detail about the case.
