Personal Insurance Applications: Duty of Disclosure


Before you enter into a contract of insurance with an insurance company, you have a duty under the Insurance Contracts Act 1984 (Cth) to disclose to the insurance company every matter that you know or could reasonably be expected to know, is relevant to their decision whether to accept the risk of insurance and, if so, on what terms. You have the same duty to disclose those matters to them before you renew, extend, vary or reinstate a contract of insurance. Your duty, however, does not require disclosure of a matter that:

  • diminishes the risk to be undertaken by the insurer
  • is of common knowledge
  • the insurer knew, or in the ordinary course of business, ought to know or
  • the insurer have waived



If you do not disclose to the insurer every matter that you know or could reasonably be expected to know, that would be relevant to the insurer’s decision whether to accept the risk of the insurance and if so, on what terms, we may avoid the contract, or avoid your cover within three years of entering into it, provided that we would not have entered into that contract or accepted cover for you had full disclosure been made. Where the insurer are entitled to avoid a contract of life insurance, they may elect not to avoid it but apply either of the following options:

  • reduce the sum that you would have been insured for in accordance with a formula that takes into account the premium that would have been payable if you had disclosed all relevant matters to the insurer; or
  • vary the contract in such a way as to place the insurer in a position that we would have been had you disclosed all relevant matters or not made a misrepresentation

Where your contract is in respect of death cover, the insurer may only apply the first of the two options and the insurer must do so within three years of you entering into the contract or the insurer providing cover to you.