Information Disclosure - Consumers, Insurers and the Insurance Contracting Process

An insurance contract is one of the most significant documents an average consumer signs in the course of his or her adult life. It defines the scope and measure of protection available to the policy holder should the risk eventuate. Insurers similarly view the information supplied during contract negotiations as critical. As it provides a basis for assessing the risk inherent in issuing the policy, failure to disclose information fully and accurately can skew calculation of the risk level inherent in the deal and of the appropriate premium payable. For this reason, insurance contracts have traditionally been treated as a special category of business dealing. Unlike standard contracts based on caveat emptor, let buyers beware insurance contracts bind both insurers and consumers to a higher duty of honesty and good faith in their dealings with each other. Failure to fully disclose information that may affect an insurers calculation of risk in taking on the contract can potentially, therefore, result in the valid rejection of a policy holders claim.Given the potentially devastating consequences claim denial carries for policy holders, this book outlines the current legal regulatory framework governing this area and assesses its capacity to provide a just and efficient set of standards for the exchange of this information in the pre-contracting stage.