How does Continuous Cover work? |
Continuous Cover provides cover for a claim arising out of a known circumstance that should have been notified to the insurer in a prior policy period providing that the following points are taken into account:
• The current insurer was the insurer at the time the policyholder first became aware of the matter
• Continuous Cover was held with the insurer
• If the insurer had been notified of a circumstance, the policyholder would have been covered under the policy in force at that time, and the policyholder notwithstanding the known circumstances exclusion.
• The claim, nor the known circumstance, was previously notified to any insurer.
• The lesser limit of the two applicable policies will apply.
• Delayed notification may be taken into account in the adjustment of the claim should the insurers position be prejudice
• Issues of 'non-disclosure' and 'known circumstances' exclusions are not raised
• Fraudulent non-disclosure or misrepresentation does not occur
Continuous Cover and Section 21 Insurance Contracts Act
The benefits of a Continuous Cover clause do not forgive a policyholders overriding legal duty of disclosure under Section 21 of the Insurance Contracts Act (the Act):
• An policyholder has a duty to disclose every matter that is known could be relevant to the insurer accepting the risk.
• Section 28 of the Act prescribes the remedies available to an insurer if it could be shown that an policyholder failed to comply with its duty to disclose.
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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