UK: Coming Into Force: The Consumer Insurance (Disclosure and Representations) Act 2012


    On 6 April 2013, the Consumer Insurance (Disclosure and Representations) Act 2012 (“the Act”) will come into force, and apply to all consumer insurance contracts entered into on and after that date.

    As such, it is important to be aware of the impact of the Act.

    • The provisions in the Act are mandatory.

    • A duty of utmost good faith (including the duty of disclosure) is replaced with a statutory duty upon a consumer to take reasonable care not to make a misrepresentation to an insurer. If a careless, deliberate or reckless misrepresentation is made by the consumer, the insurer has certain remedies.

    • If a misrepresentation is:
      (i)   honest and reasonable, the insurer has no remedy and cannot avoid the policy;
      (ii)  careless, the insurer will apply the policy on the terms that it would have entered into,
            had the misrepresentation not been made; or
      (iii) deliberate or reckless, the insurer is entitled to avoid the policy and retain all the
            premiums paid (unless there is a good reason to return the premiums to the consumer).

    • An insurer should also take greater care when extracting information from consumers. The Act specifies that clear and specific questions should be posed to a consumer, and the importance of answering questions in full should be communicated (specifically if a policy is being renewed or varied).

    • Further, the rule that a consumer’s representation can be converted into a warranty is abolished. Therefore, an insurer cannot rely on this to repudiate liability.

    For a more detailed discussion of the Act, please click here.

    Explore Additional Topics


    Please understand that your communications with Locke Lord LLP through this website do not constitute or create an attorney-client relationship with Locke Lord LLP. Any information you send to Locke Lord LLP through this website is on a non-confidential and non-privileged basis. Therefore, do not send or include any information in your email that you consider to be confidential or privileged.