The Benefit of Continuous Cover with the same Insurer
What is Continuous Cover?
Continuous Cover gives cover for claims that have arisen out of a known circumstance and should have been notified to the insurer in a prior policy period. This is provided that the following points are taken into account:
- The current insurer was the insurer at the time the policyholder first became aware of the matter.
- Continuous Cover was held with the insurer.
- If the insurer had been notified of a circumstance, the policyholder would have been covered under the policy in force at that time.
- Neither the claim nor the known circumstance was previously notified to any insurer.
- The lesser limit of the two applicable policies will apply.
- Delayed notification may be taken into account in the adjustment of the claim, should the insurer’s position be prejudiced.
- Issues of ‘non-disclosure’ and ‘known circumstances’ exclusions are not raised.
- Fraudulent non-disclosure or misrepresentation does not occur.
Continuous Cover and Section 21 of the Insurance Contracts Act
- The benefits of a Continuous Cover clause do not forgive a policyholder’s overriding legal duty of disclosure under Section 21 of the Insurance Contracts Act (the Act):
- Any policyholder has a duty to disclose every matter that is known and could be relevant to the insurer accepting the risk.
- Section 28 of the Act details the solutions available to an insurer if it can be shown that a policyholder failed to comply with its duty to disclose.