Insurance: Draft Bill To Form Consumer Insurance Law

Yesterday the English and Scottish Law Commissions published their joint report and draft Bill to reform the law on what a consumer must tell an insurer before taking out or varying their insurance policy.

The consumer's duty to volunteer information as currently understood, based on the Marine Insurance Act 1906, would be abolished. Instead consumers would have a duty to take reasonable care to answer insurers' questions fully and accurately and to avoid misrepresentation. Whether an insurer would have a remedy if a consumer makes a mistake in an application form, would depend on whether the mistake was reasonable, careless or deliberate/reckless.

The report and draft Bill also address the status of intermediaries (brokers) in consumer contracts and make consequential provisions for this type of business. The draft Bill does not make any reform to the law of warranties in consumer insurance, a matter of previous review, except for the abolition of basis of contract clauses in this area.

The Law Commissions have urged that the draft legislation should be introduced to Parliament as a matter of priority.

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Yesterday the English and Scottish Law Commissions published their joint report and draft Bill to reform the law on what a consumer must tell an insurer before taking out or varying their insurance policy. The report and draft legislation are the next stage in a lengthy review by the Law Commissions of insurance contract law and the need for reform. Click here (/law-now/2007/insurancereformsjuly2007.htm) to read our Law Now on the Consultation Paper published by the Law Commissions in July 2007 and click here (/law-now/2008/Insuranceproposedlawreformbusinessinsurance.htm) for our Law Now on the responses received by the Law Commissions to proposed reform of the law applying to business insurance.

The draft Bill only applies to consumer insurance contracts. Additionally, the report and draft Bill address the status of intermediaries (brokers) in consumer contracts and make consequential provisions for this type of business. The draft Bill does not make any reform to the law of warranties in consumer insurance, a matter of previous review, except for the abolition of basis of contract clauses in this area.

Proposed changes in consumer insurance law

A consumer's duty of disclosure

The consumer's duty to volunteer information as currently understood, based on the Marine Insurance Act...