The Eastern Cape High Court recently reaffirmed the insured's duty of disclosure, emphasizing that this obligation arises anew each time a policy is issued, even if the insurer was previously aware of the information.

The Applicant took out a Salary Protection: Injury-Only Cover (“the policy”). Previously, she had applied for other policies with Liberty Group Limited ("Liberty"), during which she disclosed her medical conditions. In 2022, the Applicant became a victim of an attempted hijacking, sustaining severe injuries to her right hand and consequently, her employment was terminated leading to her cashing in on the salary protection benefit under the policy. However, Liberty rejected the claim on the grounds of material non-disclosure at the time the salary protection cover was issued.

In the High Court, it was argued on behalf of the Applicant that Liberty was already aware of the alleged non-disclosed information because the Applicant had disclosed it in her previous applications. It was further contended that the policy covered injury-related disabilities, not medical illness, and therefore, the alleged non-disclosed medical conditions have no bearing on the Applicant’s claim. As such, the cancellation of her policy was argued to be unreasonable, unlawful, and unfair.

In dismissing the Applicant's claim, the Court considered the Applicant's history and noted that she had been informed that the policy was a new policy, requiring a new assessment. The Applicant was further advised that her responses to the medical and risk assessment questions would form the basis of the agreement. The Court held that an insurer has no general duty to double-check or verify information provided by an applicant unless the applicant explicitly references previous applications.

This judgment serves as a reminder to applicants of their duty of utmost good faith when applying for insurance policies. Insured parties must disclose any information that could influence an insurer’s decision when applying for coverage, even if the information had been previously disclosed in earlier applications.

Access the full judgement here

Authors: Deon Francis and Jakop Mphofu