Notifying Circumstances |
It is important to notify to your insurer all circumstances that may give rise to a claim during the policy period.
If the Policyholder wants to change insurers, it is important to avoid having a known circumstance with the new insurer as it will not be accepted by the new insurer.
If a claim eventuates from the notified circumstance, the insurer cannot deny indemnity, despite the fact that the claim arose outside the period of insurance.
Failure to notify
If an Policyholder fails to notify of a known circumstance, they risk the claim being denied, and are subject to Section 54 of the Insurance Contract Act (the Act), that:
• Prevents an insurer from relying on a term of a contract of insurance to refuse to pay a claim because of an act or omission of the Policyholder that occurred after the policy began; and
• Specifies that the insurer may seek to reduce the amount they pay by proving the extent of the prejudice they have suffered because of the late notification.
Failure to notify leaves the Policyholder open to a dispute over the indemnity for a claim and they run the risk of subsequent policies being cancelled due to non-disclosure, either fraudulent or innocent.
If In Doubt ... Notify!
Amanda Smith is an award winning insurance specialist with over 14 years of experience. As the senior principal of Optimum Insurance Services, she provides qualified and tailored insurance broking services to business and corporate markets.
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