Thursday, 26 February 2015

Boring but important

New law on business insurance contracts was enacted this month and comes into force in August 2016.

The Insurance Act 2015 improves the position for businesses.

Amongst other things, the Act includes provisions that:

1. will abolish clauses in insurance contracts which automatically convert prior information supplied to insurers into contractual warranties (i.e. actionable promises or assurances by the insured);

2. will abolish also any rule of law that a breach of warranty (express or implied) results in complete discharge of the insurer's liability;

3. if there is a breach of warranty, the insurer's liability should be suspended, rather than discharged, so that insurance coverage may be restored after a breach has been remedied; and

4. that no breach of contract should allow an insurer to refuse to pay a claim if the insured shows that the breach was completely irrelevant to the loss suffered.

... not all good if this new law is used by the insurance industry to justify a hike in premiums! However, it will make it harder for insurers to wriggle out of paying genuine claims.

Paul Dixon
26 February 2015