Insurers assess 'risk to the business' on the basis of the information provided by the employer and/or the employer's agent. In general, insurance contracts are agreed and renewed on the basis of 'utmost good faith'. Therefore, the facts disclosed need to be true.

Utmost good faith not only means that the facts disclosed must be true, but also includes an obligation to inform the insurer if the facts could influence an insurer's judgement in accepting or declining a business risk, or in fixing the premium and terms and conditions of the contract. This obligation arises independently of any specific request made by the insurer or insurance broker.

Any alteration, inaccuracy or incompletion of data should be immediately advised to the insurer - once discovered. Similarly, any alteration to the business activity should be notified to the insurer. If such notification is not made, then loss of cover could ensue, since a breach of either of these obligations can result in the policy being pronounced void since inception, or the insurer refusing to accept liability for an individual claim.

If any non-disclosure or misrepresentation is deemed fraudulent, insurers may sue for damages as well as the policy being voided from inception.

Almost all policies require that there should be full disclosure of changes of circumstances during the period of the policy. Insurers will reserve the right to decline to insure in respect of those changed circumstances, so any contemplated changes should also be advised to insurers.

For more information on the employer's duty of risk assessment, see Fire Precautions (Workplace) Regulations 1997, as amended 1999.