Insurance law should be designed for consumers, not ships

As the Law Commission and the Scottish Law Commission publish a joint report recommending amendments to insurance law, Which?'s Phil Jones, says, "This law was designed with ships in mind, not consumers. It is out of date and can leave people without cover when they need it most. We do not think insurers should be able to reject claims because customers have not disclosed information they were never asked for and is unrelated to their claim."

Insurance law is based on the Marine Insurance Act 1906 and was designed for the negotiation of contracts between two expert parties and not intended to cover consumers.

The Law Commission's recommendations:

  • Insurers must ask questions about any matter which they wish to know in order to assess the risk being insured
  • Consumers who take reasonable care to answer questions fully and accurately can expect to have any subsequent claims paid in full. It is only if they answer questions dishonestly or recklessly that insurers are permitted to refuse all claims and retain any premium
  • If a consumer makes a careless mistake when answering a question, he or she might still be entitled to have some of the claim paid; a consumer's entitlement is dependent on what the insurer would have done had it known the true facts at the time the policy was taken out
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Insurance law should be designed for consumers, not ships
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