Consumer Insurance Contract Law Reform Comes to Fruition

LONDON, 05 APRIL 2013 - The Consumer Insurance (Disclosure & Representations) Act 2012 is due to come into force this weekend (6 April).  The Act means that when a customer applies for insurance they will no longer be obliged to volunteer material facts in accordance with their duty of 'utmost good faith'. Instead, they must take 'reasonable care' to answer the insurer's questions 'fairly and accurately' and not to make a misrepresentation.

As a result of these changes any remedies the insurer may then have against the consumer are dependent upon the consumer's state of mind i.e. whether the misrepresentation was honest and reasonable; careless; or deliberate and reckless.

The Act also outlaws “basis of contract” clauses, which serve to turn representations made by consumers in a proposal form in to warranties.

Helen Chapman, partner at Hogan Lovells, commented: "The coming in to force of the Act will usher in a new era in the handling of consumer insurance claims.  It will be interesting to see the extent to which insurers will still challenge insurance claims, on what basis they will mount their challenge and what remedies they will seek.  Are we entering an era in which contested claims will become a rarity?"

Further information on the reforms can be found in our briefing note here:


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