Commercial insurance contracts, and renewals and variations to non-consumer insurance terms after 12 August 2016 are subject to the Insurance Act 2015 (the “Act”). The aim of the Act is to encourage co-operation between an insured and insurers at the pre-contract stage. The Act imposes a duty of “fair presentation”. This note is relevant to anyone who proposes a new contract of commercial insurance or at its renewal or variation.
A “fair presentation” is one that presents all “material” circumstances and information accurately, in good faith and in a clear manner, such that the insurer is easily able to identify the disclosure, make further enquiries and assess the associated risk.
What is deemed to be “material”?
A fact or belief is “material” if it would influence the judgement of a prudent insurer in determining whether to provide insurance and, if so, on what terms. The Act includes examples of material circumstances, such as:
Under the Act, an insured must disclose every material circumstance which the insured knows or ought to know. This includes information in the insured’s actual knowledge and information that should have been known following reasonable investigation by the insured.
Ensuring that you make a “fair presentation”
It is important that you do not fail to disclose material information simply because the insurer did not ask a question about the material circumstance or the information that you hold.
Make sure that you keep a record of all enquiries that you make in relation to questions raised by the insurer, to show that you have undertaken a reasonable investigation to locate “material information” and disclose the material circumstances.
Avoid providing your insurer with masses of documents without specifically and clearly referring the insurer to what is the “material information”.
Melissa Baker, Solicitor