Adam Weaver firstname.lastname@example.org
might sound like a premium ride sharing app for dogs (geddit, geddit?) but it's actually Latin for Utmost Good Faith, the foundation of all insurance contracts.
Luckily, in Australia we've foregone all of the Latin in our insurance contracts, and insurers focus on the phrase Duty of Disclosure.
So what is it?
Utmost good faith
means that both you and the insurer agree to tell the whole truth and nothing but the truth, and to deal fairly and honestly with each other. And insurers do take this legal obligation very seriously - there are stiff financial penalties for failure from ASIC, APRA, and ombudsmen like FOS.
The urban legends you hear about insurers "doing the wrong thing" usually are just that - urban legends - it would be highly irregular for an Australian insurer to not follow the terms of the insurance contract very closely indeed. I always find that only a quarter of the real story makes it into the "urban legend", and that the cause of the original dispute was the insurer having the suspicion (rightly or wrongly) that the policyholder was trying to cheat them.
Duty of disclosure
The insurer's "duty of disclosure" is the policy wording. When offering you insurance, the insurer spells out all the terms and conditions into the policy wording (or PDS) and on the insurance schedule.
The client's "duty of disclosure" is to tell the insurer everything that a reasonable person would consider relevant to the insurer's decision to insure and the terms of such insurance.
What's relevant for an owner builder?
Really anything that increases the risk to the insurer; we ask a few questions as part of the quote process.
Relevant factors include:
- Has the project already commenced?
- Are you building a swimming pool?
- Will there be a lot of demolition work?
- Are you relocating or raising an existing structure?
- Are you underpinning or shoring up neighbouring property?
- Are you excavating very deep - more than one basement level?
And many more as well. No insurer would think to ask "is the building site inhabited by squatters?" but if it were, you'd be expected to tell the insurer upfront.
The idea is that all of this is common sense - if it's reasonable to think someone would want to know about the extra risk on your project, then you should tell the insurer upfront.
Most owner builder projects are very straightforward, so we've optimised our quotation process for that. Unless you have to disclose something very much out of the ordinary, quotes take only 90 seconds to complete, and are instantly e-mailed to you with options to consider, and a copy of the policy wording.
Make sure you look at the policy wording! If someone won't supply you with the policy wording as part of a quote, you have to wonder why - what is hidden in there?
At Allrisk we try to be transparent and open; we give you individual pricing on all extras, and make our forms and documents accessible on our website.
If you have any queries or aren't sure on what should be disclosed as part of the quote, please drop us a line or give us a call 1300 255 747 and we'll help.