GOOD FAITH AND DISCLOSURE

The insurer and insured both have a duty to deal honestly and openly during their contractual relationship. 

PRINCIPLE OF GOOD FAITH - disclosure made in a clear and accessible manner. 

Parties must volunteer material information in all negotiations before the contract comes into effect.

DUTY TO DISCLOSE - particularly important at the proposal stage, before the contract comes into existence. At common law, once the policy is in force the duty to disclose would be at renewal stage. 

Definition of what should be disclosed is taken from MIA 1906.

INSURED'S DUTY - Consumer Insurance: this act came into foce April 2013. Removes common law duty on consumers to disclose any info and replaced with take reasonable care not to misrepresent. 

Applies to consumers and not business/commercial insurance (consumer = someone who takes insurance wholly unrelated to their trade). 

The consumer act - people must take reasonable care to answer insurer's questions fully and accurately. 

The Act also includes safeguards preventing insurers from inc. terms that put the insured in a worse position in respect to pre-contract.

NON-CONSUMER INSURANCE: "any rule of law permitting a party to a contract of insurance to avoid the contract on the grounds that the utmost good faith has not been observed by the other party is abolished". 

The insured must make to the insurer a fair presentation of the risk. Fair presentation: 

1. disclosure of every material circumstance. 

2. the disclosure is clear and accessible 

3. all matters and fact and in good faith. 

THUS, insurers have to take responsibility for asking questions and probing for info. 

MEASURE OF THEIR KNOWLEDGE:

Insured: 

1. what is known to them as an individual; or those who is…