Disclosure Guidance

 

sign on a grey wall showing the words danger disclosureAn application for professional indemnity insurance requires full disclosure...

...of all material information. The Insurance Act places even more emphasis on the Insured that this is done correctly.

This requirement increases the burden on the person responsible for buying this insurance, because material information means 'any information that will influence an underwriters rating or decision on providing cover'. Given that this is open to interpretation, it’s a grey area and the most common cause of disputes with Insurers.

In recent years, insurance companies have significantly reduced the amount of information they require for quotation purposes. On the face of it, this seems to benefit the policyholder because it means less form filling and time saving. However, it does in fact create potential non-disclosure problems for the Insured. Just because the proposal form doesn't ask the question, doesn't mean you won't need to tell the Insurer.

Quite simply, the less information you provide about your firm, the more chance there is of something important not being disclosed and leading to a breach in the policy obligations. This could be a historic claim, new areas of work being conducted, a new subsidiary business, an additional office, an employee disciplinary - the scope is large especially for growing businesses with employees and directors or partners. Unless full disclosure is given at all times, a firm runs the serious risk of a claim not being covered or their policy cancelled.