DUTY OF DISCLOSURE

The duty of disclosure under United Kingdom law is a duty to pass on to Underwriters all material information relating to the risk under consideration. "Material" in this context refers to all information which a prudent Underwriter (not necessarily the Underwriter in question) would wish to take into consideration when considering whether or not to accept the risk and, if so, upon what terms and at what price. Material information does not necessarily have to actually increase the risk. The duty of disclosure continues up until the insurance contract has been concluded, but then resurrects itself at the time of proposed renewal or extension of, or any amendment to, the insurance contract.
It may also be that the terms of the insurance contract include specific ongoing disclosure warranties. Therefore, in addition to providing all of the basic information necessary to enable the risk to be placed, you must ensure compliance with the duty to disclose material matters relating to the risk. In particular, underwriters must be satisfied as to the accuracy and completeness of the information provided and ensure that all information is provided that an Underwriter needs to take account of in considering whether or not to accept the risk and, if so, upon what terms and at what premium. In the event that there is a breach of the duty of disclosure, the Underwriter(s) may have the right to avoid the insurance contract from its commencement. Under such circumstances, the Underwriter(s) would be entitled to see recovery of any claims already paid by them under the contract, although at the same time the Underwriter(s) would generally be obliged to return paid premiums.
The duty of disclosure and the consequences of its breach may vary to a limited degree from the foregoing dependent upon the law(s) applicable to the insurance contract. If you are in any doubt as to the ambit of the duty of disclosure you should have no hesitation in contacting us.