The Insurance Act 2015: An Overview

If you own or run a business you may already have some awareness of the Insurance Act 2015 but do you understand what this might mean for you?

The Insurance Act 2015 aims to benefit both insurers and their business customers by increasing transparency and certainty over the rules that govern how they do business with each other. In financial terms, businesses are expected to benefit by around £100m over the next ten years due to factors such as lower litigation and transaction costs (source:

The reforms contained in the Insurance Act 2015 cover three main areas of insurance contract law:

  • Disclosure and misrepresentation in business and other non-consumer insurance contracts. The existing duty on business policyholders to disclose risk information to insurers before entering into an insurance contract is amended with the introduction of a duty of “fair presentation” of the risk. It also provides the insurer with a number of proportionate remedies when a policyholder breaches the duty.
  • Warranties and similar terms. The Act abolishes “basis of the contract” clauses, which have the effect of converting pre-contractual information supplied to insurers into warranties. It also provides that the insurer’s liability should be suspended, rather than discharged, in the event of a breach of warranty, meaning insurance coverage is restored after a breach has been remedied. Finally, it provides that breach of a warranty or similar term should not allow an insurer to refuse to pay a claim if the insured shows that the breach was completely irrelevant to the loss which has been suffered.
  • Insurers’ remedies for fraudulent claims. The Act provides the insurer with clear, robust remedies when a policyholder submits a fraudulent claim
  • Please note this is a very brief overview of what is a detailed Act of Parliament. If you wish to read about the act in full, we recommend you visit the government website. This is an important topic and doubtless one we will return to over the coming months. P F Spare Insurance Brokers are pleased to work with a number of respected insurers who have already begun to introduce the requirements of the Act into their current business practices ahead of it coming into force in August 2016. Why not let us review your existing business insurances and offer you a bespoke business insurance quote.