When you’re arranging insurance, you must tell the full story – even details that seem minor. If the insurer later finds you left out material information, they can decline your claim and cancel your policy, leaving you uninsured.
What happened?
Adrian wanted to insure his car and thought it would be cheaper to add it to his employer’s business insurance policy. He gave the car’s details to his employer, Hana, who passed them to the insurance broker.
The car was not registered at the time, and Adrian asked if it could be registered in his name and be covered by the business insurance policy. The broker said yes, so Hana confirmed that she wanted the car added to the business policy.
About a year later, Adrian discovered that his car had been damaged in a storm several months earlier, while it was at a repair shop. Adrian made a claim, which the insurer initially accepted, offering $17,000. Adrian thought this was not enough and challenged it.
After reviewing the claim, the insurer found that Adrian and Hana hadn’t disclosed that the car was a long-unregistered personal restoration project. Because information about the car’s condition hadn’t been fully disclosed when it was added to the policy, the insurer declined the claim, and cancelled the cover for Adrian’s car.
What were the parties’ views?
Adrian complained to the broker, saying they should have asked more questions about the car’s condition when arranging the insurance. Adrian said he had told the broker all the important information and relied on their expertise to arrange the correct insurance.
The broker disagreed, saying that Adrian and Hana had not shared all the important information. The broker acknowledged that Adrian told them the car was not registered, but not that it had been unregistered for a long time, or that it was a personal restoration project.
What was FSCL’s view?
We found that Adrian hadn’t told the broker all the important information, including that the car was a restoration project for personal use, not business.
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