The ‘Insurance Act 2015’ comes into force perhaps surprisingly in 2016, August the 12th to be exact and we’d like to take some time now to underline what this means for you. The Act has been written to protect both the insured and the insurers, particularly in the event of a claim.
I’ll be coming to specific points in separate parts, guiding you through some of the key points of interest in the Act. If at any point you would like to access the Act in full it can be found by following this link – www.legislation.gov.uk/ukpga/2015/4/contents/enacted
Prior Preparation Prevents
Below is an extract the Insurance Act followed by a brief explanation. Of course this might raise more questions. We would be happy to answer any queries you might have about anything brought up in this series of updates. Please do let us know – 01753 882222.
The duty of fair presentation
(1)Before a contract of insurance is entered into, the insured must make to the insurer a fair presentation of the risk.
(2)The duty imposed by subsection (1) is referred to in this Act as “the duty of fair presentation”.
(3)A fair presentation of the risk is one—
(a)which makes the disclosure required by subsection (4),
(b)which makes that disclosure in a manner which would be reasonably clear and accessible to a prudent insurer, and
(c)in which every material representation as to a matter of fact is substantially correct, and every material representation as to a matter of expectation or belief is made in good faith.
(4)The disclosure required is as follows, except as provided in subsection (5)—
(a)disclosure of every material circumstance which the insured knows or ought to know, or
(b)failing that, disclosure which gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing those material circumstances.
(5)In the absence of enquiry, subsection (4) does not require the insured to disclose a circumstance if—
(a)it diminishes the risk,
(b)the insurer knows it,
(c)the insurer ought to know it,
(d)the insurer is presumed to know it, or
(e)it is something as to which the insurer waives information.
(6)Sections 4 to 6 make further provision about the knowledge of the insured and of the insurer, and section 7 contains supplementary provision.
This section actually comes in multiple parts and we will come to each in turn however the crux of what we need to talk about is contained in this section.
As before when looking to obtain insurance it is imperative that you put the facts to the best of your knowledge in front of the insurer. This needs to be done in a clear and accessible manner whether that be by email or in conversation. In order to do this you must therefore have at your disposal a wealth of relevant information. This is perhaps where an online platform might fall down because there is no guarantee that it will ask all of the relevant questions. If it is business insurance you are after then you will need informaiton about the business itself – what it does and how it does it – along with information regarding the Directors history, your management team and staff. This is clearly more involved than simply describing your car or home when talking about domestic insurance.
It is upon this information that the insurer will offer cover and so it is of course in your interest to paint as wider picture as possible. The more transparent and wide the presentation to insurers the more accurate their rating will be. A lack of information may mean that the insurers might have to be cautious about the rates they apply going off a ‘worse case scenario’.
Please remember that these rules apply throughout the policy so if your circulstances change it is imperative that you notify your insurers as such. Not to do so would be in breach of this part of the Act and might lead to your position being prejudice in the event of a claim.
Next time…… Knowledge is Power