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2. Further to the question above, if a piece of non-disclosed information is not related to a particular claim (e.g. I submit a claim due to an injury from playing football, but I had not previously mentioned my smoking habit), can the insurance company still reject such claim?

As indicated in the answer to Question 1, the question is whether the information is material (i.e. relevant) to the risk for which insurance is being sought. A medical insurance policy provides coverage for the medical costs when the person is ill or injured and needs to incur medical costs. If a person smokes that increases the risk of getting ill, so it is highly relevant (i.e. material) for an insurance company’s assessment of the risk of providing the person medical insurance. Indeed, it is likely the insurance company will charge a higher premium for the medical insurance policy if the policyholder is a smoker.


So if this fact is not disclosed, and the person later makes a claim under the insurance policy for medical costs arising from a football accident, the insurance company can reject the claim, avoid the policy and hand back the premium, even though the football accident has nothing to do with the person being a smoker. 


This may seem unfair. That, however, is the result of an insurance policy being based on the principle of utmost good faith and the duty of disclosure. If the non-disclosed information is vital enough to have affected the underwriting decision of the insurance company, it may be legitimate for the company to decline a claim (and avoid the insurance policy) even though the non-disclosed information is not related to the current disease or injury.


The disputes settled by the Insurance Complaints Bureau indicate that drinking and smoking habits are an important factor in the assessment of the risks in life or health insurance by insurance companies. As such, factors such as this (i.e. drinking or smoking habits) should be disclosed to the insurance company when buying these types of insurance policies.


Again, we would reiterate that it is imperative that when filling in an application for an insurance policy, a person answer the questions as fully and carefully as possible. If the person thinks of a fact which he is unsure whether it is material, it is better to be cautious and draw it to the insurance company’s attention.