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The Importance of Checking Your Insurance Statement of Fact

A Statement of Fact is a form which details various information about your business to the insurer. While it may seem laborious, carefully checking your answers on this document is crucial. Here's why.

What is a Statement of Fact?

A Statement of Fact is a record of the information you provide to the insurer about the risk being insured. This may include details about your premises, business activities, risk management and past claims history. The insurer relies on this to decide whether to offer you insurance and on what terms.

Your Duty of Fair Representation

Under the Insurance Act 2015, you have a legal duty of fair presentation when providing information to an insurer. This means you must disclose all material facts known by your business's senior management and/or the individuals who arranged the insurance. A material fact is one that could influence the insurer's decision over providing a policy and setting its terms.

Consequences of Incorrect Information

If you provide incorrect or incomplete information in the Statement of Fact, you may breach the duty of fair presentation. Here are some potential consequences:

  • Insurers can void the policy from inception - this means the policy is treated as if it never existed. This would lead to declined claims.

  • Insurers can impose additional terms on the policy retroactively. For example, they may apply exclusions for certain risks if they would have excluded them with full knowledge of the facts.

  • Insurers can proportionately reduce claims payments for valid claims. Claims settlement could be reduced based on what premium would have been charged with accurate information.

  • For business insurance, any breaches of the duty of fair representation allow insurers to apply remedies, even if unintentional.

  • For consumer insurance, remedies only apply for deliberate or reckless breaches.

  • Disputes, delays and costs involved in challenging an insurer's decision to impose different terms or decline a claim.

  • Reputational damage if the business is seen to have misrepresented risks to an insurer.

  • For severe breaches, the insurer could void the policy and keep the premium while refusing all claims.

Checking is Vital

Given the severe consequences of providing inaccurate information, it is vital you have a robust process for checking the Statement of Fact answers. All relevant staff members should verify the details to confirm they are true and complete before cover is incepted. This reduces the risk of disputes later on if claims arise and helps ensure valid claims are paid.

Statement of Facts may change, so we recommend regularily reviewing the information and remembering to update your insurance provider when something in your business changes.

Peace of Mind

Carefully checking your Statement of Fact provides peace of mind that you have fulfilled your legal duty. Taking the time upfront could prevent time-consuming disputes further down the line. Your insurance is also more likely to pay out if you ever need to make a claim.

Verifying your Statement of Fact answers is crucial for legal compliance, valid claims payment, reduced disputes and your overall insurance protection. Investing time in this could save your business significant problems.


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