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Basketball Australia -
Managers Risk Management Toolkit
Your Duties
To ensure protection, you have various duties both before you enter into a new insurance contract as well as at renewal or whenever your risk changes. Failure to observe these duties could lead to the rejection or diminution of an otherwise proper claim.
The Duty Of Disclosure
Before you enter into a contract of general insurance with an insurer, you have a duty under the Insurance Contracts Act 1984 to disclose to the insurer every matter that you know or could reasonably be expected to know, is relevant to the insurer's decision whether to accept the risk of the insurance and, if so, on what terms.
You have the same duty to disclose those matters to the insurer before you renew, extend or reinstate a contract of general insurance.
Your duty, however, does not require disclosure of a matter:
- that diminishes the risk to be undertaken by the insurer;
- that is of common knowledge;
- that your insurer knows or, in the ordinary course of his business, ought to know;
- as to which compliance with your duty is waived by the insurer.
Non-Disclosure
If you fail to comply with your duty of disclosure, the insurer may be entitled to reduce his liability under the contract in respect of a claim or may cancel the contract. If your non-disclosure is fraudulent, the insurer may also have the option of avoiding the contract from its beginning.
N.B. The disclosure is especially important in matters relating to the physical risk, past claims, cancellations of insurance covers, the imposition of increased premiums etc. and any matters that might affect the acceptance of the risk (such as insolvency or criminal convictions).
Your duty of disclosure must be taken seriously as it may affect your right to claim. Disclosure is not limited to matters applying to to the insured named in the policy but includes other past businesses or private insurances.
The Average Clause (Under Insurance)
Many policies contain a Co-insurance (or average) provision whereby you may be required to bear a rateable proportion of the loss in the event that the sum insured is less than the value of the insured property at the commencement of the insurance. Sums insured should be such as to ensure you are not penalised by this provision.
Hold Harmless Agreements Contracting Out Removal Of Subrogation Rights
You will prejudice your rights of a claim if, without prior agreement from your insurer, you make any agreement that may prevent the insurer from recovering the loss from a third party.
These "hold harmless" clauses are often found in leases, in maintenance or supply contracts (eg. from burglar alarm or fire protection installers), building or repair contracts and sales agreements. If you are in doubt consult us.
This notification requirement applies to all Property insurances and also to Public Liability insurance. It has a special connotation in Products Liability where you must not, without the insurer's agreement, indemnify or hold a supplier harmless.
Insuring The Interest Of Other Parties
If you require the interest of any additional parties to be covered you MUST request this. Most policy conditions will exclude indemnity to other parties (eg. mortgagees, lessors, principals' etc.) unless their interest is properly noted on the policy.
Utmost Good Faith
Insurance contracts are subject to the doctrine of Utmost Good Faith and this is part of the Law.
Both parties must strictly adhere to utmost Good Faith. If you fail to do so, you may prejudice any claim.
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