On 12th August 2016 the manner with which insurance is sold in the UK will change in the most significant alteration for over one hundred years.
Up until the introduction of this act insurance has been sold on a Duty of Disclosure basis as per the Marine Act of 1906. The Insurance Act seeks to modernise insurance law and aims to make seeking payment from insurers easier and fairer in the event of a claim. Insurance will be sold on the basis of fair presentation, this clarifies what you as a client are required to disclose and what the insurer themselves should already know.
A fair representation of the risk requires clear and accessible without material misrepresentation of:-
Every material circumstances which the insured knows/ought to know.
Or failing that, sufficient information to put a prudent insurer on notice that it needs to make further enquiries to reveal those material circumstances.
Information that you as a client ought to know includes data revealed by a reasonable search. For example if you are insuring a property and it has previously flooded several years ago this is information that can be found relatively easily from property searches and online databases such as those delivered by the Environmental Agency.
Warranties and Conditions
As well as the basis of Fair Presentation there have been amendments in the way warranties and conditions will be applied to a policy. A term or warranty that is not deemed applicable to the actual loss which is not adhered to cannot be used by the insurer to avoid payment of a claim. Equally an insurer cannot apply a warranty or condition to a policy that is not applicable to managing the risk. For example where an alarm has been fitted to a property the insurers place an alarm warranty on the policy, which states that the alarm must be activated at all times for theft cover not to be restricted, even though the risk itself does not require an alarm to be fitted, this is something the Insurance Act prevents.
This is a new act and it will be working on a principal basis, meaning it will be tested by events and cases. However, at Sharrocks we will be working with you to keep you updated of any changes that affect you. Insurers will be issuing new policy documentation and our own Terms of Business will change in line with the implementation of the Insurance Act.
As a BIBA approved broker, for more information about the Insurance Act please follow this link below:-