The new Consumer Insurance Act came into effect on 6 April 2013, bringing benefits for individuals who buy insurances of all types.
The nub of the change is that the requirement for the insured to make appropriate disclosures is replaced with a duty on the insured not to make a misrepresentation in an answer to a questions asked.
The onus is therefore on the insurer to ask the right questions and the insured to answer them reasonably and responsibly. If the insured does so, a claim will be payable in full.
Where a consumer acts carelessly, there will be a proportionate reduction in the settlement which will be based on how the insurer would have acted had it been in possession of the full facts.
To deny a claim, the insurer will have to prove that the insured deliberately or recklessly made a statement that was untrue or misleading, or made such a statement without caring whether it was true or not. If that is proved and the statement was relevant to the insurer, then the claim can be resisted.
The Act does not cover business insurance, although there is a strong possibility that similar legislation will be introduced for business insurance in the future as the matter is under review by the Law Commission.