An insurance policy is a legal contract and may contain aspects that you do not understand. When you enter into an insurance agreement, there are many disclosures involved, on your part and the insurer's, as part of the policy and claim. Since disclosures play such a large part of an insurance relationship, you should understand what they are and the purpose behind them.
The New York State insurance department defines an insurance disclosure as a statement meant "to provide explanatory information regarding the significant features of the insurance policy to enable the insured to make an informed decision regarding purchasing the insurance policy." So a disclosure is designed to help you make the best decision possible about an insurance policy by explaining to you what the major benefits and drawbacks of your purchase will be.
Some state insurance departments, like New York and Washington, differentiate between disclosures that are written as part of the policy contract and those that are merely explanatory. Policy disclosures, because they are part of the policy, are subject to the same approval process as the policy itself. Disclosures that appear outside the policy, such as information sheets provided by the agent or insurer, are not subject to approval but must be kept by the agent or insurer for review by the department of insurance if required.
Sometimes insurers must make disclosures when you file a claim. In Connecticut, state law requires that insurers provide a disclosure that outlines the limits in a policy that you are claiming against. So if you file a claim for injuries you cause to another person, the insurance company must disclose how much money is available to you to pay for those injuries. These disclosures are not part of the policy, but rather explain an aspect of the policy when you need to use it.
Your Disclosure Responsibilites
When you apply for an insurance policy, you must disclose pertinent information to the agent or broker from whom you buy it. Insurance contracts are written and priced according to the type and amount of risk you present to the insurance company. If you fail to disclose pertinent information, you may be charged an inappropriate premium amount and insurers generally reserve the right to cancel your policy or refuse to cover a claim as a result. Always be honest with your agent to avoid uncovered claims.
- State of New York Insurance Department; Disclosure Statements for Life Insurance Policies and Annuity Contracts and the Prior Approval Process; October 2001
- Ohio Life & Health Insurance Guaranty Association: Insurance Policy Disclosure
- All Class Insurance Brokers Pty Ltd: Your Duty to Disclose
- Connecticut Senate General Assembly; An Act Requiring Disclosure of Automobile Liability Insurance Policy Limits Prior to the Filing of a Claim; January 2009
- Washington State Legislature: WAC 284-23-650 Disclosure Statement