Traditionally most insurances where subject to the completion of a proposal form, either prior to inception or soon after acceptance of an insurance policy. However most insurance contracts are now issued on a statement of fact basis. So what is a statement of fact and why is it so important to ensure that it is correct and or accurate?
A statement of fact is a document issued by your insurer, and forms part of the basis on which the insurance contract has been issued. It summarizes the information you have provided in order to obtain a quotation and also details assumptions made about you and/or your business. The statement of fact may also highlight conditions that apply to your policy.
So why is this important to you as the policyholder? As a policyholder you have a duty to provide a fair presentation, disclosing details which you know or ought to know about yourself and/or your business. These details are then documented within your statement of fact and evidence the basis on which your insurer have calculated your premium and determine what terms and conditions to apply.
As this document also includes assumptions it is very important that you check these in conjunction with your policy schedule and insurance certificates where applicable carefully.
If any information is incorrect or inaccurate it is important that you contact your broker as soon as possible, it is also important that you disclose anything that you feel might be material information or information that would influence an insurers assessment of the risk.
In the event of a claim insurers will look to this document whilst assessing if a claim will be paid. If there has been a failure to disclose a material fact or information that differs from what is disclosed in your policy documents this may invalidate your insurances resulting in your claim being rejected or being partially settled.
For example, a statement of fact may detail the construction and heating method of your business premises and as such in the event of a claim the insurers would look to ensure that an accurate description has been provided.
If you are unsure of what a material fact is or have any concerns about any information contained in your statement of fact or policy schedule you should discuss this as soon as possible.