The Insurance Act 2015 changes the law in relation to insurance contracts (including ordinary buildings insurance, title indemnity insurance policies and environmental policies) entered into or renewed on or after 12 August 2016. It also applies to any variations to existing policies made after that date.
For non-consumer contracts, the Insurance Act 2015 requires an insured person to make a fair presentation of the risk to the insurer. There is a new duty (which replaces the old duty of disclosure and misrepresentation which operated on the basis of utmost good faith) to disclose risks of which you:
1. are aware; or
2. ought to have been aware of; or
3. ought to have discovered after making reasonable enquiries
at the outset.
You must disclose information which:
1. would influence the judgement of a prudent insurer in determining whether (or on what terms) to accept the risk; or
2. would put a prudent insurer on notice that it must make further enquiries relating to the risk.
It will be assumed that the entity to be named on the policy has the knowledge of anyone who is part of the senior management and those in the organisation with insurance responsibilities.
A deliberate or reckless failure to present the risk fairly will allow the insurer to avoid the policy but in other cases, the breach of duty will be considered proportionately with the insurer having to show what it would have done differently had the risks been fully disclosed.
It is therefore important to consider whether there is any information which you should disclose to the insurer when requesting an insurance policy to avoid the risk of invalidating the policy or reducing the cover.