Duty of Disclosure and Misrepresentation
Updated March 7th, 2025
When you apply for insurance, you generally owe a duty to your insurer to disclose certain matters or answer certain questions honestly.
Your broker will advise you on the exact nature of the duty of disclosure that applies to you in relation to any insurance you apply for, and you should be mindful of this duty when inputting your information into the CoverMy platform.
For personal lines insurance, you also have a duty to avoid misrepresentation. This duty exists because insurers rely heavily on the information you provide to accurately assess the risk involved and determine appropriate premiums and policy conditions.
Put yourself in the insurer's shoes: wouldn't you want all the facts before agreeing to provide coverage? Misrepresentation, whether intentional or accidental, can significantly affect the insurer's ability to manage risk effectively.
This means that any information you provide must be accurate, truthful, and complete. If you misrepresent, inaccurately state, or withhold relevant information, it undermines the insurer's assessment process and can lead to adverse outcomes for you, including the insurer's right to decline, reduce, or deny coverage for any claim you make in the future.
Ensuring full and honest disclosure helps maintain the fairness and integrity of the insurance system and protects you by guaranteeing the policy you receive matches your expectations and provides effective coverage when you need it most.
Examples
Business Insurance
Imagine Sarah, who owns a cafe. She neglects to disclose previous fire incidents in her building. When another fire occurs, her insurer finds out about the undisclosed incidents and denies her claim. Don't be like Sarah.
Car Insurance
Imagine John, who recently bought car insurance. To save on premiums, John doesn't disclose a prior accident. After another accident, the insurer discovers his omission and denies coverage. Don't be like John.
Home Insurance
Consider Mike, who buys home insurance but doesn't mention previous flood damage to his basement. Later, another flood occurs, and the insurer, learning about the prior undisclosed flooding, refuses to pay for the damage. Don't be like Mike.
Always provide accurate and complete information so your insurance can truly protect you when you need it.
Need more information?
If you have any questions about your duty of disclosure, please contact your broker or insurance provider directly. You can also reach out to us for general guidance.
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