The insured's duty to describe the risk accurately at underwriting and to report any aggravation, whose breach can reduce or void cover.
The duty of disclosure is the insured's obligation to provide the insurer, at underwriting and then during the contract, with an accurate and complete description of the circumstances allowing the risk to be assessed. This duty is the logical counterpart of the information asymmetry, since the insurer can only price correctly what it knows. Under French law, breach is heavily sanctioned, an intentional misrepresentation rendering the contract void, and an unintentional misrepresentation giving rise, depending on when it is discovered, to a proportional reduction of the indemnity or to cancellation. The insured must also report significant aggravations of the risk arising during the contract. In cyber insurance, this duty takes on a critical dimension, because underwriting relies heavily on a detailed security questionnaire covering the controls in place, multi-factor authentication, backups or patch management. Several recent disputes have seen insurers contest cover on the ground that the insured had declared security measures it did not in fact apply, which places the truthfulness of the questionnaire at the heart of the cyber contractual relationship.
A company declares in its underwriting questionnaire that multi-factor authentication is deployed across all its access points. After a loss reveals that it was not, the insurer invokes the misrepresentation to reduce, or even refuse, its indemnification.
obligation de déclaration, duty of disclosure, fausse déclaration