The Insurance Act 2015 came into effect on the 12 August 2016 and radically changed Insurance Law for non-domestic policyholders.
The age old tenet of Uberrima fides (Utmost Good Faith) has been consigned to history, and in its place the new legislation imposes clearer obligations on both parties to the insurance contract.
Importantly, so far as policyholders are concerned, they are subject to the “duty of fair presentation”. In effect it requires them to carefully consider the information they supply when seeking insurance cover, in order to ensure that all material facts of which the insurer might otherwise not be aware about the risks are openly disclosed. It is no longer valid, if it ever was, to argue at time of claim, that ‘the insurer never asked the question’.
Equally, there are stricter obligations on insurers about how they may interpret and exercise their use of the ‘small print’, and in most circumstances it is not legitimate for an insurer to exclude a claim or cancel cover on the grounds of a breach of warranty unassociated with the circumstances of the claim under consideration.
The effects of the new legislation are still evolving, and as with previous legislation and insurance contracts, practices and precedents will develop with the passage of time. We always recommend commercial policy cover is placed through insurance brokers, and in that way policyholders may expect to receive appropriate advice on the information they need to disclose.