What your insurer needs to know before you need to claim

Aug 29
3 min read

Updated: 3 days ago

Introduction

A business starts offering a new service, takes on a subcontractor, begins storing stock in a container behind the unit, and has a period where the premises stand empty between tenancies. None of this is mentioned to the insurer, because none of it seemed like an insurance matter.

A claim is then declined, or reduced, on the basis of non-disclosure. In almost every case this is not dishonesty; it is a business getting on with trading and not realising that the insurer's assessment was based on facts that have since changed. It is the most common reason cover fails when it is needed. And it is the one entirely within the business's control to prevent.

1. What your insurer needs to know is anything that affects the risk

The general principle.

Insurers priced the policy on the information given. Anything that materially changes that picture needs to be disclosed, and the test is what a prudent insurer would want to know rather than what seemed relevant to you.

2. Disclose changes in what the business does

The most common omission.

New services, new trades, different materials, work at height, work with heat, or a new type of customer. Businesses evolve continuously and the policy reflects what you did at inception. Three years of gradual change adds up to a business the insurer would not recognise.

3. Tell them about premises changes

Including the temporary ones.

New sites, additional storage, work being done to the building, and any period of unoccupancy. Unoccupied premises are treated very differently by insurers and are a common source of declined claims. The threshold is frequently around thirty days and is easily crossed over a holiday period.

4. Report previous claims and incidents honestly

Across all policies and all businesses.

Proposal forms typically ask about claims history, including claims made by directors in other ventures. Omissions here are straightforward to discover and are treated seriously.

5. Disclose relevant convictions and regulatory matters

Uncomfortable and necessary.

Insurers commonly ask about unspent convictions of the business or its directors, insolvency history and regulatory action. The questions are asked because the answers affect the risk assessment.

6. Update staff numbers and what they do

Affects several sections at once.

More employees, staff driving for work, staff working from home or people carrying out higher-risk tasks all change the exposure. This is easily forgotten between renewals.

7. Answer the questions asked, accurately and completely

The specific obligation.

Where a proposal form or renewal declaration asks something, the answer must be accurate. Guessing a figure or leaving a question because it seemed unclear creates exactly the problem you are trying to avoid.

8. Tell them about incidents even when you are not claiming

A policy condition people miss.

Most policies require notification of circumstances that might give rise to a claim, regardless of whether you intend to claim. A minor incident with no complaint at the time can become a claim two years later.

9. Put disclosures in writing and keep the record

Protects you if it is ever disputed.

A telephone call to a broker is easy to lose. An email confirming what was disclosed and when, kept with the policy documents, is what settles a later argument about whether you told them.

Build a habit of one email to your broker whenever anything changes materially. That single practice prevents most non-disclosure problems, takes a couple of minutes, and costs nothing compared with a reduced settlement at the point you actually need the policy.

Conclusion

Disclose anything that affects the risk, because non-disclosure is the most common reason claims fail.

Tell your insurer about new services, materials or types of work, report premises changes including periods of unoccupancy, declare claims history honestly across all ventures, disclose relevant convictions and regulatory matters, update staff numbers and duties, answer proposal questions accurately rather than approximately, notify incidents even where you do not intend to claim, and confirm every disclosure in writing.