To whom does the duty of disclosure apply in contracts of insurance?

In insurance contracts, the duty of disclosure primarily applies to the proposer, who is the individual or entity seeking coverage. However, it's essential to understand that this duty is not unilateral. Both parties involved in the contract—the proposer and the insurer—have obligations that pertain to disclosure.

The proposer must actively disclose any material information that could affect the insurer's decision-making process regarding the issuance of the policy or the terms of coverage. This includes any information that might influence the insurer's assessment of risk or premium calculations. Failure to do so may result in the insurer being entitled to void the contract or refuse claims.

On the other hand, the insurer also has a duty to disclose certain information to the proposer. This primarily includes providing comprehensible details about the terms of the policy, any exclusions, and the nature of cover offered. This reciprocal duty supports a meaningful and fair exchange of information, fostering transparency and trust in the contractual relationship.

Although the proposer is the one primarily obligated to disclose material facts, recognizing that both parties have a duty to disclose relevant information ensures that the insurance market operates fairly and that both parties are informed about the terms and conditions governing their contract.