The Insurance Act 2015 is the first overhaul of UK insurance law for more than a century. It applies to any insurance policy which commences or is amended on or after 12 August 2016.
We don’t have space to cover all of the changes introduced by the Act but one important aspect is how all businesses present themselves to an insurer when seeking a new insurance policy, or renewing an existing policy, known as “fair presentation of the risk”. There are a number of practical steps a construction sector business should take:
- You must inform the insurer of all material circumstances you know about or that you ought to know about. Insurers have a greater onus to investigate the risk which is presented to them so you may find they ask more questions of you than they have previously.
- You must carry out a “reasonable search” for information material to the risk being presented. What constitutes reasonable will be different for every business but it is important to retain evidence of the search you undertook as it may be crucial in the event of a future dispute with insurers.
- Introduce standard procedures to ensure that you do collate material information which will also help to evidence that you carried out a reasonable search.
- The potential sources of information about your risk have been broadened to include the senior management of the business and anyone involved in the procurement of insurance such as insurance managers, insurance brokers, accountants and lawyers. Obtaining information will therefore take longer so it is important not to leave your preparations to the last minute.
- You must present your risk to your insurer in a clear and accessible manner. The practice known as “dumping” vast amounts of information on an insurer and expecting them to determine what is relevant is no longer acceptable.
Whilst the changes to risk presentation are subtle, they are important. If you are in any doubt, our insurance team has the expertise to provide you with guidance if required.