The Insurance Act 2015
The Insurance Act 2015 comes into force on the 12th of August 2016 and changes the way the law deals with commercial insurance contracts. The purpose of the Act is to update the current law to reflect the way in which the insurance market has evolved in modern times to achieve a fair and balanced regime between insurers and insured.
Who does this affect?
Anyone with a commercial insurance policy – New or existing
As a company we ask our clients to review what was disclosed each renewal. When did you last check the accuracy of what your insurers knew of the risk they are insuring for you?
We suggest asking for a copy of your proposal or statement of fact and review what was said. If your disclosure ought to have been clearer then clarify it NOW or risk the consequences.
What you need to do?
Under the Act insurance contracts will still be based on good faith and you will have a duty to make a fair presentation of the risk to insurers. Every material circumstance which you are expected to know or ought to know about must be disclosed.
You must ensure that any information you provide is correct to the best of your knowledge and subject to you having conducted a reasonable search for information.
What happens if I make a misrepresentation?
In the event that you make a misrepresentation of information which is considered to be deliberate or reckless an insurer will be allowed to avoid your policy, which means that any claims you make will not be met and no refund of the insurance premium will be made.
If however you make a misrepresentation of information which is not deliberate or reckless but was an honest mistake or omission there are a number of remedies which may be applied by the insurer to achieve a fair outcome as follows:
• If the insurer can prove that it would not have written the policy at all, the insurer can avoid the policy but must return the premiums paid.
• If the insurer would have accepted the risk but on different terms, the contract is to be treated as if it included those terms.
• If the insurer would have entered into the contract but charged a higher premium, the insurer may reduce proportionately the amount to be paid on a claim.
1 Stop Insurance Consultants Ltd
020 8773 2222