1. INTRODUCTION Insurance law requires businesses to obtain protection or coverage against various types of risks (including the risk of loss due to fire, negligence, crime and risk of death of essential persons working in the business) and also distributes the risk of loss. Furthermore, insurance law consists of an insurance policy which is a contract in which one party (who is the insurer) agrees in exchange for a considered price to cover the other party (who is the insured) for loss arising from a specific event. In short, it is a contract by which, for a specified fee, one of the parties undertakes to compensate the other for a loss relating to a specific object resulting from the occurrence of certain risks. (Paul Latimer, Australian Business Law, 33rd edition) DUTY TO DISCLOSE UNDER COMMON LAW In the duty of disclosure under common law, the insured party has a duty of utmost good faith to disclose all material facts provided but not make any material errors in the pre-contractual phase of an agreement, i.e. before the definition of a policy. However, any type of breach of this obligation would give the insurer the right to cancel the policy at the stage of a claim. Furthermore, the insured has an additional and continuing duty of utmost good faith to disclose material facts and information and to avoid making material misrepresentations while the policy is in force. On the other hand, the insurer is equally bound by both pre-contractual and ongoing obligations of utmost good faith to disclose or not misrepresent material facts to the insured. (Wei Song, The Extent of the Insured's Duty to Information, 2012, Pg 14)In common law the materiality test is known as the Prudent Insurer Test, which refers to a fact that is......a means of card.. ....es would not have stipulated an insurance contract (contrary to having to establish it, it would not have stipulated an insurance contract for any term).• At any time the sum insured can be modified (unless the contract does not have a surrender value or provide a death benefit – in which case it can only do so within three years). • Furthermore, if the insurer chooses not to cancel the policy or change the sum insured, it may influence the contract in a way that puts the insurer in the position it would have been in had the failure to disclose or misrepresent were verified. However the above only applies if: - Changes can be made if the changes mentioned are consistent with what other reasonable and related insurers would have done in a similar situation. - Furthermore this will not apply to a contract providing for benefits in the event of death or has a redemption value.