Changes
to insurance disclosure
Money
Box programme on Radio 4 on Saturday 6th April 2013 at noon carried this brief
but interesting item. You can hear the programme on their IPlayer. More
See an earlier Business
News on the Radio 4 website on the insurance disclosure change in October 2011
by Otto Thoresen, Director General of the ABI.
More
Insurance
is not the most exciting topic for most classic car enthusiasts but full disclosure
of all material facts by the insured to the insurer has always been at the heart
of the insurance contract.
See our earlier article on insurance salvage
rights. More
Posted: 130408
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 | If
you take out an insurance product from 6th April 2013 the Marine Insurance Act
1906 will not apply. Phew. That was the Act which said even if the insurer did
not ask | you
something you still had to tell them about it even if you thought it wasn't relevant
to your claim. The new Consumer Insurance (Disclosure and Representations)
Act means the burden is now on the insurer to ask the right questions. And
even if something emerges later it cannot just refuse to pay out the whole claim.
Money
Box on Radio 4 at the weekend had a brief item mentioning this change in the
disclosure obligation of an insured in connection with cover provided by an
insurer. Insurance contracts are "contracts of the utmost good faith"
or uberrimae fidei and the understanding has been someone applying for insurance
has a duty to disclose all material facts which could have a bearing on the insurer's
willingness to take the risk, the insurer's assessment of that risk and the terms
of cover and premium they might require. That duty of disclosure extends during
the term of the cover and on any renewal.
Comment: This news item
may have passed many fellow members but an immediate reaction is that it will
not make all that much difference to motor insurance generally, as insurers already
ask about everything that is likely to affect their view of the risk. It should
remove some areas of uncertainty and one current one is if the driver has been
offered and taken a speed awareness course or other course as an alternative to
a fixed penalty. We have heard that at least one insurer does ask about this,
so does that mean that under the previous rule the proposer should have offered
the information without being asked? What it does not appear to do is to clear
up difficulties of definition, such as what exactly is covered by the expression
“social, domestic and pleasure” use. Many insurers are happy that use
includes voluntary work, for instance, whereas we have heard of others who say
that a business use clause is required, even if the work is unpaid. Another difficulty
occurs with a “commuting” exclusion, which insurers have held excludes
driving to a friend’s house in order to get a lift to work. I think the answer
there will continue to be it's wise to tell the insurer the full details of the
use of the vehicle. Finally one member wonders "if a catchall question such
as “Are there any other circumstances affecting the vehicle and drivers that
we should be aware of?” would be allowed by this new legislation or is that
type of question made ineffective by the new legislation?"
Further
updates will follow as clarifications come through. | |
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