Duty of Fair Presentation
Instructions and guidance
The duty to make a fair presentation of the risk
A fair presentation of the risk must be made to us when a policy is incepted, renewed or where a policy is to be amended. A fair presentation requires for us to be advised about all facts and circumstances which may be material to the insurance, in a clear and accessible manner. Material facts are those which are likely to influence an insurer in their acceptance or assessment of the terms or pricing of a policy. If there is any doubt as to whether a fact is material, then it should be disclosed.
If a fair presentation of the risk is not made, where the failure to do so is deliberate or reckless, or where the insurer would not have accepted the policy had the insurer been told about a material fact or circumstance, then the insurer may treat the policy as if it had not existed and refuse to pay any claims. In other cases, the insurer may only pay part of the value of a claim or impose additional terms.
For these reasons, it is important that checks are made of all of the facts, statements and information set out in the documentation provided by us for completeness and accuracy and that all questions are answered in the same manner. If there is more than one person responsible for the arrangement of insurance in the business, or has a vested interest in the cover provided, then checks should also be made with these key personnel, where appropriate, to make sure that the facts and statements are complete and accurate.
Examples of people who should be included within the enquiries are (where applicable):
• Senior management within the business (which includes anyone who plays a significant role in making decisions about how the activities are to be managed or organised).
• A person for whom cover is provided by the contract of insurance
• Anyone who is responsible for the procurement of the insurance cover
• If any of the facts, statements and information in this document, or any additional information provided are incomplete or inaccurate, please contact us immediately. Failure to do so could invalidate the policy or lead to a claim not being paid
Here are some examples of facts that should be disclosed (this list is not exhaustive):
• any special or unusual facts relating to the risk
• any particular concerns which led to the seeking of insurance cover
• officers of the business that have been convicted of criminal offences
• officers of the business that have been declared bankrupt or were previously a director of a failed business
• the company or director having been refused insurance cover or had a policy cancelled
• any losses arising out of fraud or dishonesty
• previous losses (regardless of fault or whether an insurance claim was made)
• a change to the business activities
• a change to the business / management structure
• connections with a country that is subject to sanctions
The duty to notify us about certain facts regarding convictions, bankruptcy proceedings and refusals of insurance cover
We must be notified with the relevant details if the business or any company in the same group as the business, or any director or partner of the business or any group company, (either personally or in any business capacity), has ever been, or is during the period of insurance:
• declared insolvent or bankrupt or the subject of bankruptcy proceedings
• the subject of a County Court judgment (or Scottish equivalent), or if there are any proceedings pending
• a director or partner in any business which is or has been the subject of a winding up or administrative order, or receivership or other insolvency proceedings
• convicted or charged with any criminal offence, or have a prosecution for such an offence pending, (except for the Road Traffic Act offences of parking or speeding on one occasion if there are no convictions)
• prosecuted or served with a notice of intended prosecution, or a prohibition notice in connection with a breach or alleged breach of any health and safety legislation
• refused or declined insurance cover or has or has ever had insurance cancelled, renewal refused or had special terms imposed.
This is very important because if we are not notified of any of the circumstances above, an insurance claim may be reduced or not paid, additional terms may be imposed or the policy cancelled. Please note that spent convictions do not need to be disclosed.
Business operations in countries that are subject to sanctions
We must be notified with the relevant details of all circumstances, including those which may arise during the period of the insurance cover, involving activity by the business or its group companies, (including direct or indirect imports and exports, other forms of trading, services, travel and working abroad), in the following countries and territories:
Belarus, Crimea, Cuba, Democratic Republic of Congo, Iran, North Korea, Russia, Somalia, South Sudan, Sudan, Syria, Ukraine and Zimbabwe.
Failure to disclose
If we are not notified of the facts and circumstances described above, including those which may arise during the period of the insurance cover, we will treat this as confirmation that there is no information to supply in relation to that fact or circumstance. If clarification is needed of any point please asks us for further information.
Confidentiality and copyright
To protect our intellectual rights we ask that the information and advice contained in this document, is not disclosed to anyone else or reproduced for them.
Please take the time to read the policy documents and make sure the terms and conditions are understood. If the conditions of the policy are breached, then any claim that may be made might not be paid or cover may be withdrawn.
Despite being insured, care must still be taken as if no insurance was in force. If something happens that could lead to a claim, reasonable steps must be taken to minimise any losses.
Sometimes an insurer will need specific information or ask for particular action to be taken and generally cover will still be provided whilst doing what they’ve asked for. If this happens we will make sure we will provide the necessary information on what to do and when by, and what will happen if this is not carried out.
Warranties and conditions precedent
A breach of warranty suspends the cover provided by the insurance policy for the duration of the breach and the insurer is not obliged to pay any claims during this period. If the breach can be fixed before a loss has occurred, the cover is restored. However, if a warranty or other policy term is breached, the insurer cannot rely on the non-compliance of that warranty or policy term in order to refuse to pay a claim if it can be proven that the breach did not increase the risk of the loss which occurred. This does not apply to a term “defining the risk as a whole”, for example a policy term which defines the geographical area in which a loss must occur.
Great care needs to be taken not to breach warranties, conditions precedent to liability and other policy terms and The Insurance Octopus should be notified immediately of any breaches that occur during the policy period.
The policy will advise clearly what is required in order to comply with ‘warranties’ and ‘conditions precedent’. Please remember that if these are not adhered to then a claim, or claims, may not be paid until the warranty or condition is complied with.
Most policies don’t insure against losses caused by terrorist activities. Cover can usually be arranged separately for this, so please get in touch if you’d like a quotation.
Sometimes things may not go entirely to plan. Both The Insurance Octopus and the insurers we deal with welcome the opportunity to discuss any concerns that may arise about any aspect of the service received. Should a problem need to be discussed, please contact us in the first instance. Details of how to contact the insurer will be in the policy document.
Clients and the insurers are free to choose the laws applicable to a policy. As insurers are based in England, they propose to apply the laws of England and Wales and by purchasing a policy the laws of England and Wales will be applied and agreed by both parties.