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.
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.
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.
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
- • conducting business in or with clients that are based overseas
Also 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.