Utmost good faith

Insurance contracts are built on utmost good faith because the insurer prices the risk from what you tell it — it cannot inspect your life. So the law asks more of you than an ordinary contract: you must disclose every material fact (anything that would affect the insurer's decision to cover you or the premium), accurately and proactively, not only answer the questions put to you.

Material facts on a motor policy include who really drives the car, where it is garaged overnight, modifications, previous claims and losses, and how the car is used. Get one of these wrong — even innocently — and the insurer can reduce or decline a claim, or void the policy, for non-disclosure or misrepresentation.

The duty runs both ways: the insurer must deal fairly with you too. But in practice it is policyholder non-disclosure that drives the Ombudsman caseload. The defence is simple and powerful — answer every question fully and truthfully, volunteer anything that might matter, and update the insurer whenever your circumstances change.