The duty of disclosure
Under the Insurance Contracts Act 1984 (Cth), before you enter into a contract of insurance you have a duty to disclose every matter that you know, or could reasonably be expected to know, which is relevant to the insurer’s decision to accept the risk of the insurance and, if so, on what terms. Any disclosure made to us in relation to this insurance application or insurance cover will be considered to have been made to the insurer.
You have the same duty to disclose those matters before this policy is extended or varied.
You do not have to tell us about:
a) a matter that diminishes the risk undertaken by the insurer; or
b) a matter that is considered to be common knowledge; or
c) facts that the insurer knows or should know in the ordinary course of business; or
d) matters that we tell you we or the insurer do not need to know.
If in doubt you should disclose a matter to us.
If you fail to comply with your duty of disclosure and the insurer would not have entered into the contract on any terms had the matter you failed to disclose been known then the insurer may avoid the contract within 3 years from the date you entered into the contract. If your non- disclosure is fraudulent the insurer can avoid the contract at any time.
If you have failed to comply with your duty of disclosure and the insurer is entitled to avoid the contract but the insurer elects not to avoid the contract, they may, within 3 years from the date the contract was entered into, reduce the insured amount in accordance with a formula which takes into account the premium that the insurer would have charged had you not failed to comply with your duty of disclosure.