The Consumer Insurance (Disclosure and Representation) Act 2012

When applying for insurance, information must be provided so that the insurance company can supply an accurate quotation. The duties and obligations depend on whether cover is requested by a consumer customer (under the Consumer Insurance (Disclosure and Representation) Act 2012) or a commercial customer. Any application made for insurance through B. Portwood is made on the understanding that the following is adhered.

Consumer Customers

Under the Consumer Insurance (Disclosure and Representation) Act 2012 it is your duty as a consumer to TAKE REASONABLE CARE not to make a representation to an insurer.

Under the Act a consumer is defined as an individual who enters into an insurance contract wholly or mainly for purposes unrelated to the individual's trade, business or profession.

A failure by the consumer to comply with the insurers request to confirm or amend particulars previously given is capable of being a misrepresentation for the purposes of this Act.

It is important that you ensure all statements you make on proposal forms (including electronic forms), claim forms and other documents are full and accurate and we recommend that you keep a copy of all correspondence in relation to the arrangement of your insurance.

Under the Act an insurer has a remedy against a consumer in respect of qualifying misrepresentation in breach of the consumer's duty of reasonable care where the insurer deems the misrepresentation to be either deliberate, reckless or careless.

If in doubt about any point in relation of your duty to take reasonable care and subsequent qualifying misrepresentation please contact us immediately. (01388 607140 or 08448262617)

Commercial Customers

It is your responsibility to provide complete and accurate information to insurers when you take out an insurance policy, throughout the life of the policy and when you renew your insurance.

It is important that you ensure all statements you make on the proposal form, claim forms and other documents are full and accurate and we recommend that you keep a copy of all correspondence in relation to the arrangement of your insurance.

Please also note that any renewal of insurance will be made in reliance upon the information provided by you in connection with your previous insurance policy - we will assume that such information remains correct unless you tell us otherwise.

Please also note that if you fail to disclose any material information to us and your insurers, this could invalidate your insurance cover and could mean that part or all of a claim may not be paid. You should take particular care to check the accuracy of all information you provide.

If in doubt about any point in relation to material facts please contact us immediately.

Examples

• You buy an unoccupied property with the intention of doing it up and moving in - You  are a consumer customer and the Act protects you.

• You buy an unoccupied property with the intention of letting it out or selling for a profit. You are a commercial customer and have a higher duty of disclosure

• You buy a van for pleasure use - you are a consumer customer

• You buy a van for business use or put it in the name of a company - you are a commercial customer

• You use your car occasionally for work - you are a consumer customer

• You use the car mainly for business use - you are a commercial customer

• You buy travel insurance for holiday use - you are a consumer customer

• You buy travel insurance to cover your many business trips abroad and extend it to cover business equipment - you are a commercial customer.

• All insurance contracts in the name of companies or other legal identities (LLP etc) are commercial customers and the Act does not apply.

Sanctions under the Act

• If the misrepresentation was deliberate or reckless (meaning that you intended to make a misrepresentation or didn't care whether a misrepresentation was made, and the misrepresentation was relevant e.g. answering a question plainly asked on a proposal form) then the insurer can avoid the policy, not pay out any claim and refuse to give any money back (other than what is fair)

• If the misrepresentation was careless (i.e. not deliberate or reckless) then the options the insurance company have depend on what they would have done had they known about the misrepresentation.

  • if they would not have accepted the proposal they can avoid the policy, refuse to pay any claim - but have to give the money back

  • If they would have imposed different terms (not being a change in premium) then they can impose the same terms at the point of claim

  • If they would have charged a different premium then (as well as imposing the terms) they can reduce the claim on a proportionate basis. e.g. if the premium was £200 and it should have been £400 then they can halve the amount paid out.