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Closing the Loopholes for Insurance Claim Rejections

Soon, under new rules which the Government plans to introduce, fewer insurance claims should be rejected because people have failed to give their provider all the information it needed. The Consumer Insurance (Disclosure and Representations) Bill will be introduced when Parliamentary time permits. The reforms were put forward by the Law Commission and the Scottish Law Commission in their 2009 report on pre-contract disclosure and misrepresentation in consumer insurance law.

Current law dates back to the Maritime Insurance Act of 1906 and has not kept pace or been modernised in line with the growth of the consumer market. In these days gone-by, a consumer had to make known all possible information the insurer might possibly consider relevant to the policy being taken out. Under the proposed changes, it will be the responsibility of the insurers to ask particular questions to obtain all of the information they need.

The move aims to prevent valid claims from being turned down because consumers unintentionally gave the wrong information, although people who deliberately misled insurers would still have their claims rejected.

The bill has received broad support from industry and consumer groups, but the Government will be making minor modification to it in order to address some concerns that were raised during the consultation.

The Law Commission had previously estimated that if the legislation was passed it would mean that insurers could pay out for £4.4 million more for life claims, and between £5 million and £20 million for other policies. However, the Association of British Insurers (ABI) said the new proposals, which take into account work that the industry is already doing, would not be so costly.

So, what does this mean for you? If you have any concerns about your current insurance policies, talk to an independent expert. Give Westhill Insurance Services a call and explain your insurance worries to them and they will guide you in the right direction. There is no set date yet for this new Bill to come into force, but it will make a major difference to the way in which insurance claims are dealt with in the future. This is good news for the consumer, but you will need to be aware of the changes: professional advice is a must and the team at Westhill are happy to help you understand how you may benefit from the change in the law when it comes into force.

Contact Westhill Insurance Services, today.

Posted on 20th May, 2011