Definition:
Duty of disclosure is the legal obligation on an insured party to tell the insurer, before a policy is entered into, anything they know or reasonably ought to know that would be relevant to the insurer’s decision to accept the risk and on what terms. It’s set out in section 21 of the Insurance Contracts Act 1984 (Cth), and applies across every class of insurance in Australia, not something specific to any one product.
Why It Matters
Like all insurance, strata cover is no different, the insured party still carries a genuine legal obligation to disclose relevant facts honestly and completely. Where it does get more specific is who the insured party actually is. For strata schemes, that’s the owners corporation itself, a legal entity, rather than an individual lot owner. Business and commercial insurance contracts, including owners corporation policies, fall under the traditional section 21 duty of disclosure, a stricter standard than the “reasonable care not to misrepresent” test that applies to personal, domestic insurance contracts like home or car insurance. Known building defects, prior claims history, and structural issues all need to be disclosed accurately regardless of which line of cover is involved, and getting this wrong can affect whether a claim is later paid.
Related Coverage
Relevant to: Residential Strata Insurance, Commercial Property Insurance, Industrial Special Risks Insurance, Block of Units Insurance, Landlords Insurance