The Insurance Act 2015
What businesses need to know
The Insurance Act is a piece of legislation designed to modernise Britain’s insurance industry. The previous regulations which govern the contracts between businesses and insurers are over 100 years old. The Insurance Act received Royal Assent on 12th February 2015 and came in to force on 12th August 2016.
The areas of legislation which are affected by the Act are as follows:
To read the Insurance Act 2015 in full go to www.legislation.gov.uk.
What the reforms mean for businessesThe aim of the Act is to remove rules which no longer reflect good commercial practice and balance the interests of the insured and insurer to put both parties in a neutral position. The Government estimates businesses will benefit by about £100 million over the next ten years through lower litigation and transaction costs.
What has changed
1. Disclosure and misrepresentation in business insurance contracts
When obtaining insurance under the previous Act business owners are required to disclose anything which may influence an insurer in deciding whether to accept the risk and at what premium.
Under the new Act, a new ‘duty of fair presentation’ applies and whilst there is still a requirement to disclose all information which a business (“the insured”) knows or ought to know, in the absence of full disclosure the duty is still met if the insurer is provided with sufficient information to enable them to ask more questions. This puts the insured and the insurer in a more balanced position.
In gathering the information to disclose, a business is expected to undertake a reasonable search of the information available to them, and the Act provides clarity around who must be included within this search (where applicable):
Information should be presented in a manner which is clear and accessible, the intention is to prevent ‘data dumping’ where excessive information is sent to insurers with the expectation that they will pick out what they need. The duty of fair presentation applies to new business and renewals from 12th August 2016. It also applies to mid-term adjustments effective from 12th August 2016, even if the policy was taken out before that date.
2. Remedies for non-disclosure or misrepresentation
Under the previous Act, in the event of a non-disclosure or misrepresentation, the insurer was able to treat the policy as if it had never existed and refuse to pay any claims.
The new Act brings in a fairer, more proportionate approach whereby if the breach was deliberate or reckless the insurer can still walk away from the policy, refuse to pay any claims and retain the premium.
If the breach was not deliberate or reckless, the remedy available depends on what the insurer would have done had the full information been available to them when the policy was taken out.
A warranty is a term in an insurance contract which must be strictly complied with. Under the previous law, if a warranty is breached, the insurer is discharged from all liability as from that date, even if there is no connection to a claim and the breach can be rectified.
With the new Act, in the event that a warranty is breached, the insurer’s liability will be suspended rather than discharged. If the insured can rectify the breach, cover is restored. Where a warranty or other term has been breached, an insurer will not be able to decline continued cover if the insured can prove that there was no causative connection between the breach and the loss. The Act also abolishes ‘basis of contract’ clauses, a statement an insurer can add to documentation which automatically transforms statements made by the insured into a warranty.
4. Remedying fraudulent claims
The new Act clarifies the remedy available to an insurer in the event of a fraudulent claim. The insurer has the option to terminate the contract from the time of the fraudulent act and is not responsible to pay the claim. If the insurer had made any payment in respect of the claim, it is able to recover those payments. However, the insurer would remain liable for any genuine losses prior to the fraudulent claim.
Next steps for businessesThe Act came into effect in August 2016, extending to every commercial insurance policy written in the United Kingdom (with certain exceptions). We will be in touch to discuss your insurance requirements in good time before your renewal date, in the mean time you should start to think about how the changes will affect you, such as what information you may need to disclose, who holds this information within your business and how you might capture it.
Disclaimer Any views or opinions expressed in this briefing are for guidance only and are not intended as a substitute for appropriate professional guidance. We have taken all reasonable steps to ensure the information contained herein is accurate at the time of writing but it should not be regarded as a complete or authoritative statement of law.
Driving in winter can be a huge risk
With unpredicted weather conditions it’s important to prepare your vehicle for whatever Mother Nature throws at us. Find out more in our winter driving guide.
What to do if your vehicle breaks down
- Ensure you have breakdown cover and keep the number of your provider stored in your mobile phone. Call then as soon as you can.
- It’s useful to have a reflective jacket, torch and warm waterproof clothes in the vehicle
- It’s useful to have a mobile phone with GPS capability in case you don’t know exactly where you are
- Always exit the vehicle through the doors on the left hand side and if there is a safety barrier stand behind it – it’s important to stay well away from moving traffic
- Don’t try to make repairs yourself, wait for a rescue vehicle
- Be patient but if you feel threatened sit in the passenger seat, lock the door and phone 999
And should the worst happen…
Always be sure you, your property and possessions are protected. Should you need to review your cover or need assistance our team are here to help.
Call us on 01623 397300
Understanding the riskEvery winter millions of pounds of damage are experienced by businesses and households from burst pipes, roof snow collapses and water ingress. However by taking some basic precautions and planning ahead, many incidents can be prevented or the effects of damage minimised.
Preventing Burst Pipes
- Protect pipes and tanks with good quality lagging to BS6700.
- For unoccupied buildings or those with a history of freezing incidents, leave the heating set at a low level, or drain all equipment that is susceptible to condensation or freezing.
- Install a frost stat to central heating and check it is working correctly.
- Arrange for premises to be inspected at least daily in periods of very cold weather.
- Service heating systems at least annually.
- Drain down all idle boilers.
Always be Prepared
- Ensure that you know the layout and routes of all water, gas and electricity services within the premises and that this information is recorded and available.
- Know the location of all main and subsidiary stop-taps and ensure they are fully operational.
- Research the details of reliable local plumbing contractors and keep their contact details available.
- Isolate water at stop cock. Turn on cold taps to drain the system as quickly as possible.
- Protect or remove any vulnerable contents or equipment that may be damaged.
- Never use naked flames to thaw ice plugged pipes and equipment.
- ‘Ice dams’ can be created on the edges of roofs, especially tiled roofs by the continual thawing and refreezing of melting snow. Water may ‘back up’ up the roof getting under the tiles and leaking into the building. To help prevent this keep drains open & free of ice in a safe manner.
- Monitor the amount of snow on roofs and clear them before accumulations reach unsafe levels. It is especially important to check flat roofs, which generally need re-covering every five to ten years.
- Deter burglars – Make sure you draw your curtains during the evening so that you don’t let potential burglars see what you have in your home when the lights are on.
- Use a light timer – If you are going to be away for an extended period use a timer to set your lights to come on at certain times each day to make it look like someone is at home.
- Fit security lights – Fit security lighting that points at your door or your window to brighten dark areas that burglars may take advantage of.
Preparing the home for winter
- Reduce drafts – look for small gaps around windows, fireplaces and TV and telephone wires where cold air could be coming through and seal these.
- Keep your gutters clear – regularly clear away any leaves located near gutters to prevent them from falling into the drain pipe and blocking them.
- Check the roof – have any broken or missing tiles or slates replaced and other damage repaired.
- Sweep your chimneys – If your chimneys are in use, make sure that they get swept every year. This will remove the build-up of dirt and grime from your chimney walls and prevent soot escaping.
- Save sharing your snaps ‘til you get back – It’s best not to advertise your holidays on social media sites, some thieves will see this as an open invitation.
- Don’t put travel plans online or post photos