New Law Affects Non-Disclosure Insurance Claims
The UK’s insurance contract law is being changed for the first time in a century, which is providing a positive outlook for policy holders and potential claimants. It will be made harder for insurance companies to turn down a client’s claim on the grounds of the non-disclosure of relevant information. The new consumer insurance act came into effect earlier this year in April. This is the first major legal change that the industrial industry has seen in over 100 years, with the last change being made in 1906. These changes mean greater security for insurance policy holders, providing that they do not lie to the insurer in regards to their circumstances.
When buying an insurance policy, you are asked a number of questions in order to find out about your circumstances and to tailor your cover to yourself. The consumer insurance act will be protecting you in case you unwittingly give them incorrect or incomplete information because they should have asked you for it. A good example of this is consumers being refused claims on car insurance due to them having listed their employment position incorrectly because the insurance form did not have the suitable options available for you to choose between. Basically, your insurance company is at fault if they didn’t ask you for all the required information. You will, however, not be protected if you knowingly lied on your policy form.
The Association of British Insurers (ABI) has updated their code of practice on non-disclosure. This code of practice is put in place to reduce the number of claims that the insurers can turn away based on the non-disclosure of information. The ABI said: “We want customers to take out insurance policies with the confidence that they are covered. By placing a legal duty on insurers to ask customers all relevant questions at the point of sale, people will know exactly what they need to disclose upfront.” The act is also working to reduce the number of fraudulent claims, which cost the industry over £1 billion on a yearly basis. It is being made harder and harder for people to provide false information to their insurer on purpose and still get away with a fake claim.
The consumer insurance act affects any personal insurance policy. This includes car, home, pet and health insurance. It also does not matter where you purchase your cover – you will be affected. This means that you can buy from a broker, directly from the insurer or through a price comparison site channel and you will be covered. Even after the implementation of these new acts, insurers can still turn down certain claims on the grounds of non-disclosure. This will occur when the consumer has lied on purpose in order to lower their premium, or for any other reason. You must answer all questions properly and truthfully and contact the insurer if you are unsure about anything. The act also applied to any policy renewals after April 6th so make sure you check your renewal notice.
James Savery, 21 August 2013