Insurance Act 2015

Summary

The Insurance Act 2015 is the most significant reform of insurance contract law in over a century. It replaces the duty of disclosure under the Marine Insurance Act 1906 with a duty of fair presentation, reforms the insurer's remedies for breach (introducing proportionate remedies instead of automatic avoidance), abolishes basis-of-the-contract clauses, and provides a new default regime for late payment of insurance claims.

Key Points

• Replaces duty of disclosure with duty of fair presentation (s.3)
• Insured must disclose material circumstances in a manner reasonably clear and accessible (s.3(3))
• Proportionate remedies for qualifying breaches — avoidance only for deliberate/reckless breaches (s.8, Sch.1)
• Abolishes basis-of-the-contract clauses (s.9)
• Implied term that insurers must pay claims within a reasonable time (s.13A)
• Contracting out permitted but with transparency safeguards (ss.16–17)
• Duty of fair presentation: the insured must disclose every material circumstance known or which ought to be known (s.3)
• Proportionate remedies for non-disclosure (depending on whether deliberate/reckless or innocent)
• Breach of warranty suspends insurer's liability; liability resumes when breach remedied (s.10)
• Abolition of 'basis of contract' clauses (s.9)
• Contracting out is permitted but subject to transparency requirements (s.16)
• Implied term to pay claims within a reasonable time (s.13A, added by Enterprise Act 2016)

Parts & Sections

Amendments History

Frequently asked questions

What is the duty of fair presentation under the Insurance Act 2015?

The Insurance Act 2015 replaces the old duty of disclosure with a duty of fair presentation. Before entering an insurance contract, the insured must disclose every material circumstance they know or ought to know. This duty applies to all non-consumer insurance contracts and reinsurance, requiring the presentation of risk to be reasonably clear and accessible to the insurer.

What happens if I fail to disclose material information to my insurer?

The Act introduces proportionate remedies for breaches of the duty of fair presentation. Instead of automatically allowing the insurer to avoid the contract, the remedy depends on the nature of the breach. Avoidance is generally reserved for deliberate or reckless breaches. For innocent or non-deliberate breaches, the insurer may be limited to proportionate remedies, such as reducing the claim or increasing the premium.

Are basis-of-the-contract clauses still valid in insurance policies?

The Insurance Act 2015 abolishes basis-of-the-contract clauses. This means that a representation made by the insured in connection with a proposed insurance contract cannot be converted into a warranty. Consequently, if a statement turns out to be inaccurate, it does not automatically void the policy unless it constitutes a breach of the duty of fair presentation or a specific warranty.

How does a breach of warranty affect my insurance cover?

Under the Act, a breach of a warranty in an insurance contract suspends the insurer's liability rather than discharging it entirely. This means the insurer is not liable for claims while the breach is ongoing. However, if the insured remedies the breach, the insurer's liability is restored, and they must cover subsequent claims as normal.

Do insurers have to pay claims within a specific timeframe?

Section 13A of the Act, inserted by the Enterprise Act 2016, implies a term that insurers must pay valid claims within a reasonable time. If an insurer fails to do so, they may be liable for damages for late payment. While insurers can contract out of this requirement, they must do so in a transparent manner to ensure the insured is aware of the exclusion.