Posts Tagged ‘David’

Consumer Insurance (Disclosure and Representations) Act 2012

Consumer Insurance ActThe Consumer Insurance (Disclosure and Representations) Act 2012 came into force on 6 April 2013 and applies to all consumer insurance contracts entered into on or after that date. The Act modifies principles of consumer insurance law in England, Wales, Scotland and Northern Ireland. This Act applies only to consumer insurance contracts, or insurance contracts made by individuals ‘wholly or mainly for purposes unrelated to their trade, business or profession’. This also includes ‘mixed-use’ contracts, or contracts that cover both personal and business use, as long as the main purpose of the insurance contract is personal. These new duties and responsibilities will not affect commercial or business insurance contracts. The following provides a general overview of the new requirements and duties for the consumer, and insurer remedies if duties are breached. GENERAL OVERVIEW Previously when purchasing personal insurance, the consumer had a legal duty to disclose and not misrepresent any material fact that a prudent insurer would consider relevant. If a consumer breached this duty, the insurer could then avoid paying out the claim, regardless of whether the non-disclosure or misrepresentation was an innocent one. The Act now places the duty to gather information on the insurer instead, requiring the insurer to request from the consumer any material information needed to assess the risk. The consumer’s new legal duty is to take reasonable care not to make a misrepresentation to the insurer. Consumer’s Duty to Take Reasonable Care Not to Misrepresent Even though the insurer now has the duty to ask for relevant information from the consumer before an insurance contract is entered into or amended, the consumer must still take reasonable care to not make a misrepresentation. A misrepresentation can include the failure to respond to a request to confirm or amend information previously given. The standard of care required is that of a reasonable consumer. Whether a consumer took reasonable care or not will be determined in light of all relevant circumstances. The Act lists several circumstances that can be considered when making a reasonable care determination, including: − The type of consumer insurance contract and its target market − Any relevant explanatory material or publicity produced or authorised by the insurer − How clear and how specific the insurer’s questions were − In cases where the consumer failed to respond to an insurer’s questions, how clearly the insurer communicated the importance of answering those questions and possible consequences − Whether or not an agent was acting for the consumer In addition, whether the insurer knew or should have known of particular characteristics or circumstances about the consumer must be taken into account. Any dishonest misrepresentation will always be determined as showing a lack of reasonable care.  

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Basis of Liability Cover

Basis of Liability CoverLiability policies are offered in two forms and it is important to know the difference between these:

Occurrence coverage

This can be the preferable option for a business owner.  Cover is provided for a claim no matter when it occurs.  If the claim is reported today but the incident occurred several years previously, subject to certain conditions, the insurer should deal with the claim.  A good example is the mesothelioma claims which have been occurring recently when the ‘caused’ date (exposure to asbestos) is many years previously. Problems can arise when buying a business where the insurance cover has not been fully investigated and the insurance history has not been completely determined.  Claims can arise leaving the company with a liability that they did not expect and can ultimately cause the business to fail.

Claims made policies

Claims made policy will only react to claims made during the period of insurance.  After the insurance period, if the client does not pay the renewal, then cover ceases.  Some insurer especially providing life sciences insurance cover insist on claims made cover. To continue cover after the insurance period ends then tail cover (extended reporting period endorsement) can be requested. If you take out cover with another insurer having claims made cover then you must take out tail coverage.

We are happy to discuss your Liability Insurance queries with you – call us on 01707 883377 or email us on

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Instructions For Maintaining Properties

Property MaintenanceIn order to comply with your insurance cover the property that is insured must be regularly maintained with special attention to any requirements imposed by the insurers following a survey of the premises.  The following points are just a few of the things which must be carefully considered: 1. Make sure the electrical inspection certificate is up to date. 2. Any flat roofs must be inspected and any defects repaired. 3. Gutters should be inspected and cleaned out as necessary. 4. Storm drains should be inspected and cleaned out as necessary. 5. If an alarm is required by the insurers then it should be checked in accordance with NSI, SSAIB requirements. 6. Check to see that any roof mounted equipment is secured soundly and also check that lightening conductors are connected and there is no break in the connection. 7. Complete a fire assessment in accordance in accordance with H&S requirements. 8. Trim back any foliage and have trees pollarded regularly if necessary. 9. Fire extinguishers must be checked annually. 10. Check all stairways and walkways for surface defects where trips or falls could occur. These seemingly basis steps are so often overlooked and in the event of a claim can be a reason insurers do not pay.  The insured has a duty of care and as a result, you must make sure basic steps are carried out to ensure you do not invalidate your policy.

To discuss your property insurance requirements contact Bromwall on 01707 883377 or email us on

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Is Your Insurance Cover Correct?

ID-10094997There are some Brokers and even some insurers who will provide an insurance quotation even though they must be aware that the cover they are providing is not fit for purpose. Business interruption is often miscalculated and under insured, and in the event of a major claim, leaving the client with a large loss which could result with the business failing. Brokers in order to compete with an existing renewal will try every trick to reduce the premium in order to gain the business. The client is completely unaware and quite happy to pay a lower premium. We have found that one way to reduce the premium is to quote business interruption on a gross profit representing 12 months when the existing indemnity period is 24 months. This can roughly reduce the premium by about 30% but in the event of a claim the client will be underinsured. Brokers will also obtain quotes on reduced turnover and wages. This leaves the liability cover underinsured. Although this does not affect the cover it will produce a large additional premium at the end of the term. There has also been an instance of a broker reducing material damage cover to indemnity only. This would only show up if there was a claim and the payment would not be on a replacement basis but on the basis of the value of the goods at the time of loss, less wear and tear. If an insured is offered a premium well below their existing premium examine this very careful as it may not be worth the paper it is written on.

We are happy to discuss your Commercial Insurance queries with you – call us on 01707 883377 or email us on

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