Misrepresentation, Non-Disclosure and Breach ... - Law Commission

General questions
4.21 As we have seen, proposal forms may include some extremely wide questions.
This example, from the FOS study, asks the proposer if they had ever been ill:
Have you any physical defect or infirmity or is there any ailment or
disease from which you suffer or have suffered or to which you have a
tendency?
4.22 Insurers may react to the abolition of the duty of disclosure by asking even wider
questions, along the lines of “is there anything we might wish to know about?”.
We therefore need to consider whether such questions should be allowed and, if
so, how they should be interpreted.
4.23 General questions may serve a useful function, particularly if there is no general
duty on consumers to disclose facts that an insurer may never think of asking
about – such as the threat to burn down the house. The general question avoids
at least the first criticism of the duty to disclose made by the 1980 report, that the
consumer may not realise they have such a duty. It warns the consumer that they
should mention issues that increase the risk. The problem with such questions,
however, is that the consumer may be left in doubt as to what is wanted.
4.24 We think there is a practical distinction between very general questions that stand
alone, and those which follow a series of specific questions and clearly direct the
proposer’s mind to unusual circumstances that the insurer might not know about.
The former are much less likely to elicit useful information about unusual factors
than are the latter.
4.25 There are different ways of dealing with general questions. One way is the
Australian approach for consumer insurance, by which insurers may only ask
general questions if they have first asked specific questions, and then only about
matters that the insurer could not reasonably be expected to make the subject of
a specific question. 23 If the insurer asks a general question when it should have
asked a specific question, it is taken to have waived the duty of disclosure in
respect of those matters. Effectively, the court will strike out the question and
disregard the answer.
23
Insurance Contracts Act 1984, s 21A(4).
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