Duty of Disclosure

The duty of disclosure was the traditional legal requirement under the Insurance Contracts Act 1984 where consumers had to disclose every matter they knew was relevant to the insurer's decision to provide coverage and on what terms. This placed significant burden on consumers to determine what might be relevant, often leading to claim disputes when insurers argued non-disclosure even for matters the consumer didn't understand were important. For consumer insurance (including most personal insurance like home, motor, health, and life), this duty was replaced on 5 October 2021 by the more consumer-friendly duty to take reasonable care not to make a misrepresentation. However, the duty of disclosure still applies to commercial and business insurance contracts, where policyholders are expected to have greater sophistication and knowledge. Under the duty of disclosure, failure to disclose relevant information could allow insurers to void policies or reduce claims. The shift to the reasonable care standard represents a significant consumer protection improvement, recognizing the information asymmetry between insurers and consumers.