What is the Consumer Insurance Act?

by jqm | Oct 3, 2016 | Business Insurance, Business Insurance Blog, Just Quote Me

What is the Consumer Insurance Act and What Does It Mean for You?

The Consumer Insurance Act became law on 6^th April 2013. It made the relationship between insurers and their customers much more transparent. It made it clearer what information needs to be disclosed to the insurer at the time of taking out insurance. The legislation meant there were some changes to keep in mind for customers as well as insurers.

The last change to non-disclosure in insurance contract law prior to 2013 was in 1906 so definitely in need of an update. The Association of British Insurers code of practice on non-disclosure played a role in minimising the number of claims declined because of this issue but the legislation itself needed updating too, and that’s what the government did.

What does the Consumer Insurance Act mean?

Your insurer is obliged to ask specific questions to gain the relevant information about your individual circumstances when buying insurance. You probably see similar questions whenever taking out a policy. The Consumer Insurance Act provides legal protection for you, if you accidentally or unknowingly provide incorrect or incomplete information to your insurer. Your insurer is not legally allowed to decline a claim on non-disclosure grounds unless it can be proven you were especially careless or deliberately misrepresented your circumstances.

The Consumer Insurance Act applies to all policies which are taken out for personal use. This means anything from home insurance to pet insurance and car insurance to health insurance. It is applicable to all personal use insurance policies wherever they are bought and through whatever means.

Whilst there have been no huge changes because of this legislation, it is important to have it officially put down on paper. Prior to the Act insurers could theoretically act unscrupulously and decline claims on the basis of non-disclosure because of genuine accidents, but it wasn’t a common practice.

Can Claims still be Declined on the Basis of Non-Disclosure?

As mentioned above there are cases where non-disclosure is the right reason for declining a claim. The Consumer Insurance Act allows insurers to decline claims if the customer can be found to be deliberately, carelessly or recklessly giving incorrect or incomplete material about their circumstances when applying for insurance. You have a legal responsibility to answer all the questions correctly and if you have any concerns or cannot answer a question, you should contact your insurer immediately.

Terms such as deliberately and carelessly can be difficult to pin down exactly, but the legislation simply requires all consumers to take reasonable care whenever answering questions about your circumstances.

The insurance industry has made considerable changes to its practices to ensure that consumers feel they are being treated fairly. This Act simply puts down many of these changes into law and means any companies still choosing to act unfairly and unscrupulously will struggle to do so.

If you have any questions about the Consumer Insurance Act please contact Just Quote Me on 0800 084 2325 or email us at contact@justquoteme.co.uk