Insurance Made Easy
This doesn’t come into play until 12th August 2016 but the fundamental changes in the principles of material fact and disclosure contained in the Act are already having an effect on insurers’ attitudes and policy wordings. Up until now, the Marine Insurance Act 1906 ruled but there have been many court actions since then which have tweaked the original principles. The new Act tries to clarify matters and bring everything up to date.
The key change is that instead of insurers being able to void a policy because of a breach of warranty or non disclosure of a material fact, they must now apply a more proportional response ie what would they have done if the fact had been declared. Obviously, the potential problem still remains that the insurer will be looking at this with the benefit of hindsight so the insured is still on a hiding to nothing, but at least will get some of the claim paid.
The other “good” bit is that non relevant warranties can’t be invoked to decline a claim and “basis of contract” clauses which, effectively, turn conditions into warranties will be banned.
The “bad” bit is that an insurer is still only required to settle a claim within a “reasonable” time and there is no facility to apply interest to outstanding claims payments although this appears to be on the agenda for Parliamentary review.
What does this mean to us mere mortals? Still provide all relevant information and, if in doubt, throw it in anyway and you can then expect to get a fairer crack of the whip when it comes to a claim.
We are often retained to provide help on problem claims and the most common causes of dispute are late notification of circumstances and failure to declare material facts. Theoretically, things should improve but we are still available if they don’t.