The Insurance Act 2015 will come into effect within the UK on 12th August 2016. The act aims to make the process of arranging insurance clearer and fairer for both the insured and the insurer. The key provisions of the Act are as follows:
- There will be a new duty of “fair presentation” for the insured replacing the obligation to disclose all material facts. The insured will be required to disclose “every material circumstance which the insured knows or ought to know".
- New proportionate remedies are available to insurers following a breach of the new duty of fair presentation. For example; a deliberate or reckless breach could result in avoidance of the contract, all claims refused and no return premium, whereas a situation where the insured makes an innocent mistake may now result in a much less severe action such as an increased premium, application of different terms, or avoidance of the contract with a return premium.
- Basis of contract clauses are abolished. These clauses currently operate to turn the insured’s pre-contractual representations including answers to proposal form questions, into warranties.
The changes to duty of disclosure may seem subtle, however, this still requires policyholders to make a reasonable search to reveal material information. For more information about the changes and how to prepare for them please contact our office.