Insurance insights

Why insurers ask the questions they ask…

When you’re arranging a new policy or extending or renewing an existing one, there is certain information that you need to tell the insurer. If you are not honest, or try to hide information, it can impact cover and claims…

If an insurer asks you questions that are relevant to its decision to insure you, you must answer them with all relevant details.

Providing the insurer with what they need to know is called the policyholder’s duty of disclosure. The duty of discourse is actually a legal requirement set out under the Insurance Contracts Act 1984. And, it works both ways – the insurer has a similar duty, which is why they provide you with your insurance documents.

What needs to be disclosed?

The questions a prospective policyholder will be required to answer relate to details about themselves and their property.

Things about the policyholder that may need to be disclosed include their full name, contact details, age, occupation, insurance history, criminal record, recent claims, any refusal by an insurer to offer cover, or circumstances that might give rise to a claim.

As landlord insurance is a property cover, details about the property need to be disclosed too. The prospective policyholder may need to disclose information including the property address, the age of the building, what it is constructed of, the condition of the structures, and other characteristics and features of the property.

Let’s dive a little deeper into a couple of these things…

• Condition of structures. It’s a condition of insurance that the property is adequately maintained. Before an insurer will issue a policy, they are likely to need to know if the property is in good repair to begin with. A structure that is in poor condition is more likely to suffer damage that results in a claim. For example, a roof with cracked or missing tiles is more likely to allow water into the property during a hailstorm, or a structurally unsound shed is unlikely to survive gale-force winds. If a property is already damaged, the insurer needs to know about it.

• Previous claims. Insurers usually ask whether the prospective policyholder has made any claims in the past couple of years. If the policyholder has made a claim, the insurer will generally ask for details. Knowing if and why a claim has previously been made can help determine the risk the policyholder and the property may present. The insurer will also usually ask if the prospective policyholder has been refused cover. If cover has been refused, the insurer is likely to investigate why in case it impacts the decision to offer cover also.

• Age of the property. It’s important that the policyholder gets the age of the property right. It’s especially important when the property is older. There are a couple of conditions that need to be met if the property is more than 70 years old before EBM RentCover (and other insurers) will offer cover. Our policies require any building that is more than 70 years old to have been re-wired and re-plumbed within the past 35 years. This is because of the increased risks associated with old electrical wiring and old plumbing. So, how do you find out the age of the property? Your first point of call should be your local council. Your council is likely to have the details of when the property was constructed. But what if the council has lost the documents? Before plans were digitised, councils held hard copies – and in some cases the documents have been lost (for example, via a fire or a natural disaster such as a flood). If the council doesn’t have the records, the next point of call should be the state or territory public records office. The records office may hold documents including drawings of houses and plans, parish and township plans, land records, rates books, and valuation records. If the property is heritage-listed, details of the property will be available from the applicable heritage register. Other sources to consult could include the titles office, and library.

Prospective policyholders are not required to disclose matters:

• that they don’t know;

• that reduce the insurer’s risk

• which are of common knowledge;

• that the insurer knows or ought to know;

• that are not relevant; or

• that the insurer has told them that they do not need to disclose.

There can be serious consequences if a policyholder withholds information that they are required to tell the insurer. The insurer may cancel the contract or reduce the amount it will pay the policyholder if they make a claim, or both. If the policyholder’s failure to tell the insurer is fraudulent, the insurer may refuse to pay a claim and treat the contract as if it never existed. Ultimately, by clearly communicating the intended use of the property, landlords can ensure they have the right coverage, avoid potential disputes, and protect their investment effectively.

So, when it comes to insurance contracts, it pays to be honest and tell the insurer all that it needs to know. If you have any questions about EBM RentCover landlord insurance policies, please get in touch with a member of our Expert Care team – 1800 661 662.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.