What should you tell insurance companies?

We get asked this question a lot and our answer all the time is EVERYTHING.

WHY?

Insurance companies can use a clause called the "Material Non Disclosure" clause to void or minimize paying out claims. In laymans terms if you fail to tell them something relevant (or material to the insurance contract offered) then insurance companies can cancel your cover and decline a claim.

Because of our specialist claim division we see many non disclosure issues arise. Some are no fair and in these instances we will "saddle up and go into battle for the client". However some are quite ligitmant.

For example a person approached us wanting car insurance after he got annoyed about a claim being declined. What he had not told the insurer was that he has had a number of drink driving and dangerous driving convictions. Is this a material non-disclosure? You bet you last dollar it is. Why would an insurance company open themselves up to that extra risk?

On the life insurance side we recently had a lady approach us for some life cover. She did not disclose to us or the insurance company that she had been feeling ill and had been to the doctor a few weeks earlier and was having further tests for cancer. Unfortunately when the claim was filed six weeks later the insurance company obtained a copy of her medical records and discovered these very material facts and the claim and insurance cover was voided.

So why is it a big deal?

Insurance companies need to be careful on the level of risk they bring onto their "book of clients". If they aren't careful then the claims rise and then the premiums you and I pay would increase substantially. From your side of the fence make sure you disclose everything…then you will have nothing to worry about at claim time.

PS. If you run a home office make sure you have the correct house & contents cover in place…there are many stories of this being a HUGE issue in Christchurch with EQC and insurance companies.

Philip Holland is the Managing Director for the Financial Independence group, Tauranga's leading specialist insurance and mortgage advisers. For further information please contact an adviser at Financial Independence 578 4414 or email info@yourbroker.co.nz. A Disclosure Document is available free of charge on request.

Disclaimer

This article is provided by Financial Independence as general guidance and is based on information, policies and laws in force at the time of its preparation. It is not intended to be comprehensive or a substitute for insurance, mortgage or KiwiSaver advice, which may vary depending on your circumstances. Financial Independence will not be liable to you for reliance on any statements made in this article, and you should seek specific advice in respect of your circumstances before taking any action in relation to the matters covered. Read more....