Insurance Act 2015 Flashcards
explain the insurance act 2015
new legislation that came into effect on 12 august 2016
from this date the act will apply to all commercial policies that are arranged, renewed or changed
the act aims to provide a clearer balance between policyholders and insurers to replace the old code which was not flexible and provided greater protection for the insurer
you are required to tell your insurer of all material facts about yourself and your business and the act makes it fair by requiring insurers to ask for clarification on any uncertain points made
explain fair presentation of risk
under the old act the insured was under a duty to disclose clearly and accurately all necessary details
the 2015 act clarifies what information is required and this is known as a fair presentation of risk
you will be required to present details about yourself, your senior management and anyone who is relevant to your policy
this information stopped be presented clearly and appropriately and if your insurer has any questions they are required to ask for more information.
what if i fail to make a fair presentation of risk?
before the 2015 act an insurer could cancel your policy and reject all claims if a party didn’t present a fair presentation of risk
under the new act, when an insured deliberately or recklessly (doesn’t care) hides information, cancelling or avoiding the policy is still an option
done act deliberately or recklessly you will be given a proportionate remedy
the remedy depends on what your insurer would have done had they had the full facts from the beginning.
what are the options under proportionate remedy?
if your insured, after receiving all the facts would not have offered you cover in the first place then they can cancel your policy but will return your premium so long as you didn’t deliberately hide the information.
if they had been given the information and would have accepted your policy then they are bound to pay the claim.
if they would have amended your claim to have a higher premium then this will be balanced from your claim. for example, if you premium was £500 but had they been given the full information it would have been £1000, only half of the claim would be paid.
what are warranties and how does this differ under the new act?
a warranty (also known as a condition or obligation) is a promise by an insured to take or not to take specific action during their cover.
for example, if you had insurance for potential theft in your business, you may be required to have CCTV cameras running when you are not in the premises.
a warranty can also make you ensure something is done or not done throughout the policy. such as servicing the CCTV cameras at regular intervals. if this is not done and there is a break in, the insurer may not have to pay your claim.
the 2015 act provides a fairer system for warranties as before, if you didn’t set your CCTV every day but you did on the day of the burglary you could still lose your claim.
however, under the new act, provided your cameras were running at the time of the break in your claim would be paid.
