Consulting an insurance broker to help you with your personal and/or business insurance requirements has many benefits. Your broker will take the time to get to know you personally, answer your questions about what insurance options are best suited to your needs, and be a strong advocate in ensuring you get the right cover for the right price through their industry relationships with multiple Insurers.
Duty of Care between you and your Broker
The relationship between you and your broker is based on trust and there is a duty of care between both parties to ensure the information that is given is correct and true. Your broker will need to understand as much as possible what risks you require cover for. This includes information about you for personal insurance and/or your business for commercial insurance.
One of the foundations of an insurance contract is the principal of ‘Utmost Good Faith’. When a broker discusses your insurance needs with an Insurer, they will assess the level of risk they are willing to accept based on the information you have provided. This is why it is so important that you disclose to your broker and Insurer all material facts that they ask of you and that in turn may influence their judgement on agreeing to offer you cover.
What is Duty of Disclosure?
An insurance policy, like any contract, constitutes a legal agreement between you, the ‘Insured’, and the ‘Insurer’.
When you discuss your insurance requirements with your broker, it’s crucial that you are totally honest in any statements that you make whether they are verbal or in writing.
This includes answers you give to questions that your broker may ask about your previous claims history, whether you have any criminal convictions and whether you have been refused insurance previously. Your broker will also want to know whether an Insurer has imposed restrictive terms on any insurance policy you may have previously had.
Depending on what type of insurance policy you require, for example if you are looking for property insurance cover, your broker will also need to know whether you use your home for a business and/or use part of your commercial premises for residential use. They may also ask you if you are planning to alter or renovate your premises in the near future or whether your business occupation is likely to change over the next 12 months.
New Zealand’s Law of Disclosure
It’s important to be aware that your responsibility of disclosure to your broker and Insurer does not end when you take out a new policy. You still need to let them know if there are any changes to your personal or commercial circumstances that may alter your level of risk as this could potentially affect the outcome of any claim you make.
New Zealand’s Law of Disclosure is fairly strict in comparison to other Commonwealth countries such as Australia and the United Kingdom who have softened their respective approaches on disclosure. They have made the consequences of non-disclosure, particularly if it is unintentional, much less severe.
For example, the United Kingdom now places more responsibility on the insurance company to actively ask questions of the Insured. The good news however, is that New Zealand is in the process of reforming the Law of Disclosure with the aim of bringing it more in line with other OECD countries.
How an NZbrokers Member can help
As insurance can be confusing for many people at the best of times, it can be hard to fully understand the legal implications surrounding the importance of disclosing everything that is required of you in order to take out an insurance policy.
This is where seeking assistance from your local NZbrokers Member can be invaluable. They have the knowledge and expertise to clarify what information is needed by the Insurer and to advocate on your behalf throughout the acceptance process.
By building a strong and ongoing relationship with you, your broker will be able to keep you informed of any changes to your policy when it comes up for renewal and be your first point of call if you have any questions about your policy, or to discuss changes in your circumstances.
Contact an NZbrokers member to discuss your insurance requirements and how they can help.