The Insurance Act 2015 Explained for Roofing Contractors
Here at D-marc we strive to bring our readers all the latest news and views from the construction industry and the roofing sector in particular. In August 2016 the Insurance Act 2015 came into force so today we’re going to take a look at what it means for contractors in the roofing industry and how it’s likely to affect them. There will be some radical changes on how commercial insurance claims will be treated in the future and ECIC (the specialist insurer for the construction sector) advises all contractors and sub-contractors to familiarise themselves with the new law so that they understand how they will benefit from it.
The Insurance Act 2015 is an Act of Parliament that follows on from the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA). Both Acts came about following the Law Commission’s millennium review of the law of insurance in general and involve significant reforms to insurance law here in the UK.
The legislation places a greater onus on insurers to analyse the risks they’re being expected to accept and to pay claims as long as the risks have been fairly and accurately described. As for contractors – they are required to pro-actively declare all of the information known (or that ought to be known) by them which may influence the insurer’s view of the risk. This means that the law increases the focus on what contractors need to disclose when they are taking out insurance cover and what the insurers need to be asking when underwriting the contractor’s business activities.
In the past insured parties had to disclose every circumstance that they knew (or ought to have known) which would influence the insurer when fixing a premium or deciding whether to underwrite the risk. This means that insured parties were required to predict (without much guidance) what factors a hypothetical insurer would be influenced by and the same obligation extended to brokers acting on behalf of insured parties.
Part 2 of the 2015 Act requires a “duty of fair presentation” which aims to encourage active (rather than passive) engagement by insurers while clarifying and specifying known or presumed to be known matters. Brokers are not subject to disclosure duties.
Under the Act, disclosure must be made in a reasonably clear and accessible manner, material representations of fact must be substantially correct and materials representations of expectation or belief must be in good faith. Individuals are presumed to know matters which they suspected and which they would have known about had they not deliberately refrained from confirming or enquiring about the matters.
This means that as a roofing contractor, you’ll need to fully review your disclosure processes to make sure that those who are responsible for arranging your insurance disclose all matters that they will be presumed to know. Some points to consider are:
- Make sure you keep internal records of the names and roles of any individuals responsible for arranging insurance cover as any matters within their knowledge will have to be disclosed.
- Senior management should be involved in any disclosures made.
- Evaluate the steps taken to obtain information from both internal and external sources and deep internal records that demonstrate that reasonable searches have been made.