Page 86 - W01TB8_2017-18_[low-res]_F2F_Neat

5/8 W01/March 2017 Award in General Insurance

Insurers are deemed to be aware of the normal trade practices in the businesses they insure and the
usual risks associated with them. However, this does not necessarily extend to events that have affected
the trade in question, even if they are quite recent.
Information that is waived by the insurers
Waiver may be expressed or implied. Express waiver may occur if the insurer agrees, by an express
clause in the insurance contract, to waive the duty of good faith or its right to seek remedy for the breach
of the duty.

In some cases a court may rule that it was unnecessary for the proposer to disclose certain material
facts, because the actions of the insurers suggested that they were prepared to waive (i.e. do without)
disclosure of them (implied waiver). This covers a number of situations, including the following:

• Facts about which the insurers have been ‘put on enquiry’.
• Where insurers have been ‘put on enquiry’ about things that are material they may not be able to
plead non-disclosure if they then fail to follow up the matter.
Example 5.3
The most common example is the proposer who writes a phrase such as ‘see your records’ on the proposal form in
answer to a question about their previous claims history. Insurers will be regarded as having waived their right to the
full information if they do not pursue the matter further.

Be aware
If a proposer gives no answer at all to a question on a proposal form – i.e. leaves that part of the form blank – the
5 position is less clear, but if the insurer goes on to issue the policy this could also be taken as a waiver.
Chapter This principle is now codified by s.3 (4)(b) of IA 2015. Accordingly, the proposer satisfies the duty of

disclosure if it discloses sufficient information to show a prudent insurer that it needs to make further
enquiries to reveal those material circumstances. If the insurer elects not to ask for further information
about this matter, it is assumed to have waived the duty of disclosure for the further information which
could have been revealed by it asking additional questions. Reference copy for CII Face to Face Training

Facts that are outside the scope of specific questions
If an insurer asks a question of limited scope, by implication there is a waiver of related information that
goes beyond the scope of the question.

Example 5.4
If an insurer asks for details of all accidents or losses that have occurred in the last five years, there is no need to
disclose accidents that occurred more than five years ago, even if they are material.

Facts which an inspection of the risk should have revealed
If the insurer carries out a survey or inspection of the risk there is no duty to disclose facts that should
have been obvious to the surveyor, or which any reasonable surveyor would have enquired about.
However, this principle does not extend to unusual features of a risk that a conventional inspection
would not reveal.
It goes without saying that the proposer must not actively conceal hazardous features of the risk.
Facts which the proposer does not know
As a general rule, there is no duty to disclose facts which the proposer does not know.
In marine insurance there is a duty to disclose ‘constructive knowledge’, a term mentioned referred to
earlier in this section which, in this context, refers to facts that the proposer ought to know in the
ordinary course of their business.
An insured ought to know what should reasonably have been revealed by a reasonable search of
information available to them (whether the search is conducted by making enquiries or by any other
means) (IA 2015 s.4(6)).
An insured is not taken to know confidential information known to the insured’s agent if the information
was acquired by the insured’s agent (or by an employee of that agent) through a business relationship
with a person who is not connected with the insurance contract (IA 2015 s.4(4)).