Duty of Disclosure

The duty of disclosure was the traditional requirement under the Insurance Contracts Act 1984. Consumers had to disclose every matter they knew was relevant to the insurer's decision to provide coverage and on what terms.

Why it was replaced

The duty placed a heavy burden on consumers to guess what insurers considered relevant. This led to claim disputes when insurers argued non-disclosure for matters consumers did not realise mattered.

Where the duty of disclosure still applies

The duty was replaced on 5 October 2021 for consumer insurance by the duty to take reasonable care. The duty of disclosure still applies to:

• Commercial and business insurance contracts, where policyholders are expected to have greater sophistication and knowledge.

Consequences under the duty of disclosure

• Failure to disclose could allow insurers to void policies or reduce claims.
• The duty only required disclosure of what the consumer actually knew, not what they should have known.
• Brokers could help, but the consumer remained responsible for accuracy.

The shift to reasonable care recognises the information gap between insurers and consumers.