Page 304 - IC38 GENERAL INSURANCE

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Important

Facts that need not be disclosed [unless asked for by insurer]

It is also held that unless there is a specific enquiry by underwriters, the
proposer has no obligation to disclose the following facts:

i. Measures implemented to reduce the risk
Example: The presence of a fire extinguisher.

ii. Facts unknown to the insured
Example: An individual, who suffers from high blood pressure but was
unaware of it at the time of taking the policy, cannot be charged with
non-disclosure of this fact.

iii. Facts which could be discovered, by reasonable diligence It is not
necessary to disclose every minute material fact. The underwriters must
be conscious enough to ask for the same if they require further
information

iv. Matters of law: Everybody is supposed to know the law of the land.
Example: Municipal laws about storing of explosives

v. About which insurer appears to be indifferent [or has waived the need
for further information]. The insurer cannot later disclaim responsibility
on grounds that the answers were incomplete.

vi. Facts possible for discovery: Like when a medical examiner on behalf of
an insurer takes BP measurements in a medical examination before
taking of the policy.

d) Duty of disclosure in non-life insurance

In non-life insurance, the contract will stipulate whether changes are
required to be intimated or not. When an alteration is made to the original
contract affecting the risk, the duty of disclosure will arise. The duty of
disclosing material facts ceases when the contract is concluded by issue of a
cover note or a policy. The duty arises again at the time of renewal of the
policy, if during the period of the policy; there is any change in the risk.

Example

A house owner has insured the building and its contents.

He goes on a holiday for a week - no material change in the facts.
However if he builds another floor above and starts a beauty parlour, it will
considerably alter the risk.

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