The Insurance Act 2015 came into effect on 12th August 2016, meaning there will be some changes to taking out and making a claim on your contractor insurance. The aim of the act is to modernise insurance law, making it simpler and easier for business customers to receive claims paid by insurers, whilst ensuring that insurance contracts are still fit for purpose.
So what are the big changes when it comes to your obligations?
Duty of fair presentation
One of the biggest changes comes in what you, as the insured, are obligated to disclose. Previously, this was quite broad, stating simply that you must disclose “every material circumstance” that you know or ought to know about “in the ordinary course of business.”
Now you must give a “fair presentation of the risk”. This means that you, as the insured party, must disclose clearly and accessibly:
- Every material circumstance that the insured knows or ought to know
- Sufficient information to put a prudent insurer on notice that it may need to make further enquiries
- Material representation made in relation to fact must be substantially correct and made in good faith
Failing to Make a Fair Presentation
Under the new act, if you as the insured breach your duty by failing to disclose something, however innocently, the insurer must decide whether the contract could have been entered into differently had all the circumstances been known. Subsequently, the insurer may pay a proportion of the claim in accordance with this decision.
Whilst we would never condone making fraudulent insurance claims under any circumstances, the act does determine how the policy of someone who has committed insurance fraud should be treated.
Prior to the Act coming into effect, if someone made a fraudulent claim, the insurer could nullify their policy. Under the new Act, if you as the insured were caught making a fraudulent claim, the insurer can terminate your policy with effect from the date of the fraudulent act. However, they will be obligated to cover you for any losses that occur before the act of fraud.
If you have any questions about how the Act affects your policy, or if you want to discuss your contractor insurance with us, the expert team at Kingsbridge can tell you everything you need to know.