As you may be aware the Insurance Act changes are coming into effect 12 August 2016. Along with the consumer insurance reforms that came into effect in 2013, it represents the most significant change to insurance contract law in this country for over 100 years.
The changes are designed to provide a more up-to-date framework for commercial insurance in the UK, with a focus on fairness, transparency and certainty over the rules that govern contracts.
The Act makes important changes to the law, the key elements being:
- Duty of Disclosure & Representation – The existing duty remains and is clarified with the requirement for businesses to make a ‘fair presentation’ of their risk to insurers. The insured must disclose “every material circumstance which the insured knows or ought to know”. This is now qualified where the insured (or its broker) gives the insurer “sufficient information to put a prudent insurer on notice that it needs to make further enquiries”.
- Remedies for Non-Disclosure or Misrepresentation– Remedies must now be proportionate and reflect the actual underwriting impact, had the correct information been provided originally.
- Basis of Contract Clauses – Are abolished removing mechanisms which allow avoidance if risk information provided is inaccurate.
- Remedy for Breach of Warranty – Warranties can continue to be applied, but breach will now mean liability is only suspended for the period of the breach and only where relevant to a claim.
- Remedy for Fraud – The new remedy removes the option of avoidance. In the event of fraud, an insurer remains ‘on cover’ for claims made before the fraud occurs but has the option to cancel the policy with effect from the date of the fraudulent act.
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We are Personal and Commercial Insurance Brokers based in Newquay covering the whole of Cornwall and the UK.
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