Proposal and Material Facts 投保書及重要事實

Material Facts and Risk Assessment 重要事實及風險評估

A material fact is information that would affect a prudent insurer's decision to accept a risk or set its premium; underwriting terms also matter in practice. Utmost good faith requires disclosure even without a question. Examples include unexpected flammable goods or valuable stock, previous losses or claims, earlier refusals or unusually restrictive insurance terms, the nature of the subject matter, and trading terms that could prejudice the insurer's subrogation rights.

Information unrelated to the insurance, such as the proposer's exact age when seeking fire cover, need not be disclosed. Some information affecting risk is also normally exempt from disclosure without an enquiry: circumstances reducing the risk, common knowledge such as Hong Kong's exposure to typhoons, ordinary trade processes and hazards the insurer is deemed to know, and circumstances the proposer cannot reasonably be expected to know.

Assessment can recur at proposal, renewal, a claim, a proposed material change in existing terms, or a change in risk outside the parties' original contemplation. General insurance usually runs for one year, with neither party obliged to renew; renewal creates a new contract and requires fresh disclosure. During an existing contract, newly arising or newly learnt material facts generally need not be disclosed unless an express term requires it.

Underwriting decisions include acceptance, the premium, changes to policy wording, warranties or an excess, and whether expert advice is needed first. A warranty may require the insured to do or refrain from doing something; an excess makes the insured bear part of a loss and can reduce small claims. Many general insurance policies contain a cancellation clause allowing the insurer to cancel after giving notice in accordance with its terms.

Physical Hazards and Moral Hazards 實質危險及道德危險

Physical hazards are objective features affecting the likelihood or severity of loss and are usually observable or readily established. A hazard can be favourable or adverse: sprinklers can improve a fire risk, while timber construction may present a worse risk than comparable concrete construction. Other examples include the attraction of valuable, compact goods to thieves, health and occupation under personal accident insurance, and engine power under motor or pleasure craft insurance.

Moral hazards concern the human element, including the attitudes, behaviour and character of the insured and associated people such as family members and employees. Adverse moral hazard extends beyond dishonesty or fraud to carelessness, recklessness, unreasonable inflexibility and anti-social conduct such as vandalism; an honest person can still present poor moral hazard through habitual carelessness.

Physical hazards concern objective features, while moral hazards concern people's attitudes and conduct. Assessing moral hazard is usually more subjective, and problems may emerge only when a claim arises. Underwriters consider both, alongside market competition, the insurer's business and marketing approach, and premium targets.

Proposal Forms 投保書

A proposal form is a questionnaire completed by a proposer to supply information about a risk when applying for cover. It may also be called an application, a term more commonly used in life insurance. Questions vary by class of insurance and are designed to obtain underwriting information in a form the proposer can understand and answer.

Common contents include name, address and occupation for identification, communication and risk assessment; insurance history, including existing cover, refusals and unusually restrictive terms; previous losses and claims, including uninsured losses; and the proposer's valuations and sums insured. The sum insured represents the insurer's maximum liability under the policy and is often also a basis for calculating the premium.

Information that need not be volunteered must still be answered truthfully if the insurer specifically asks about it. The form does not automatically define the whole disclosure duty. However, depending on the circumstances and the questions used, a court may conclude that the insurer has limited the disclosure it requires to matters covered by its questions.

The insurer must examine the information carefully. Blank or uncertain answers should prompt further enquiries, and failure to follow up may weaken a later allegation of non-disclosure. Where materiality or the adequacy of information is disputed, the insurer normally bears the burden of proof; courts particularly expect strong evidence where no specific question was asked.

Methods of Obtaining Material Facts 取得重要事實的方法

Proposal forms are a main source of information and may be virtually the only source for personal lines such as private motor insurance; some classes may dispense with them. Information can also appear in other documents, such as an engineering project's feasibility report, or be given orally during pre-contract discussions and survey enquiries. Written confirmation of oral statements is advisable where appropriate to reduce later misunderstandings.

Technical issues may require medical, engineering or other professional advice. Large or complicated fire, theft and liability risks often merit a site survey by the insurer's staff or an independent surveyor. If a circumstance was open to discovery during a survey conducted by or for the insurer but was missed, the proposer generally need not separately volunteer it.

Insurance intermediaries also supply information. An insurance broker acting as the proposer's agent must disclose material information held about the client and proposed risk. A failure by the broker to fulfil this duty is attributed to the proposer as a breach of utmost good faith.

Other sources include enquiries to previous insurers about claims, professional enquiry agents for matters such as fidelity guarantee proposals, checks on hire-purchase commitments affecting vehicles or other property, and confidential market information exchanged between insurers about matters such as suspected earlier fraud.