Understanding Duty of Disclosure in Strata Insurance

Understanding Duty of Disclosure

At the heart of strata insurance lies the Duty of Disclosure, embodying the responsibility of policyholders to transparently divulge all pertinent information to insurers. The weight of this obligation cannot be underestimated, as it directly influences insurers' decisions on providing coverage. It's imperative to recognise that while relevant information is to be shared, there's no obligation to disclose data that mitigates the risk.

Types of Information to Disclose

Within the sphere of Strata Insurance, an array of crucial elements warrant disclosure to insurers. Paramount among these is the revelation of Defects and undisclosed claims. Transparency here is key; any known defects or prior claims that haven't already been disclosed to the insurer must be brought to the forefront.

Renovations or construction work constitute another crucial area. If your strata property has undergone significant renovations or construction projects exceeding the value range of $250,000-$500,000, it's imperative to inform the insurer.

Government or Council orders hold equal significance in the disclosure process. Any directives issued by government authorities or local councils concerning your strata property, such as Fire Orders or Workplace Health and Safety Orders, must be communicated to the insurer.

Equally important is the disclosure of any other pertinent information that might sway the insurer's decision to offer coverage. The principle here is to leave no stone unturned; complete transparency is pivotal for comprehensive insurance protection.

Lastly, the exterior wall materials of your strata property warrant careful consideration. If your property features exterior wall materials beyond brick or concrete, such as cladding, asbestos, timber, or expanded polystyrene, it's essential to ensure these materials are properly disclosed in the policy.

Times for Disclosure

The timing of disclosing relevant information is just as crucial as the information itself. There are three distinct instances when disclosure must occur:

1. Policy Inception: When initiating a policy with the insurer, accuracy and completeness in disclosing pertinent information are paramount.
2. Policy Amendments or Endorsements: In cases of policy modifications or endorsements, any changes necessitating disclosure should be communicated to the insurer.
3. Policy Renewal: As the policy renewal process approaches, conduct a thorough review of your strata property. If any new developments, changes, or issues have arisen, these must be communicated to the insurer before policy renewal.

Consequences of Inadequate Disclosure:

Strata Insurance Solutions underscores the critical nature of abiding by the Duty of Disclosure. Insurers often examine Body Corporate records, including Meeting Minutes, to verify your awareness of any undisclosed items, especially defects. Failing to provide relevant information can lead to coverage denial or potential disputes during the claims process. To circumvent these issues, it's prudent to seek guidance from Strata Insurance Solutions or your insurance broker if any uncertainty persists regarding disclosure requirements.

Understanding and fulfilling the Duty of Disclosure stands as a cornerstone of transparent insurance practices. By adhering to this duty, you showcase your commitment to furnishing insurers with relevant information, consequently safeguarding your strata property against potential risks. Strata Insurance Solutions is your steadfast companion throughout this process, providing expert advice and customised insurance solutions. Reach out to us today to discover how we can facilitate your strata insurance journey. For further insights, connect with us on LinkedIn and YouTube.