Essex Bookkeepers on What Businesses Need to Know Now the Insurance Act is in Force

RAINHAM, U.K. - Oct. 8, 2016 - PRLog -- Applying mainly to non-consumer policies where the insured is an organisation rather than an individual, The Insurance Act 2015 which came into force on 12 August 2016 extends the requirements of the Consumer Insurance (Disclosure and Representations) Act 2012 even further by ordering that insured parties have a duty of disclosure of material circumstances that are known, plus what ought to be known. At the very least insured parties must declare enough information to let the insurers know they need to make their own enquiries.

Essex bookkeepers Office Assistants explain what this means for businesses.

"This means you need to make efforts to find out all the possible risks that you need to disclose, and you should keep comprehensive records of this research, what it has revealed and where you acquired it. Often the knowledge you need doesn't lie with just one person. Any member of your senior management team may be privy to it, also your risk managers and anyone else responsible for the company's insurance, including external sources such as an insurance broker. To a lesser extent, this applies to individuals as well."

"Disclosures must be clear, structured and relevant. You can't just dump a load of documents on the insurers for them to sift through and find what is pertinent. Unless your presentation is indexed and signposted in a coherent structure, it will not be considered adequate. Nor should it be too brief, vague or ambiguous, as is pointed out in the Explanatory notes to the Act."

Any party that fails to find out and disclose what should have been found out through diligent research can be penalised by insurers in specific ways. "If anything is proven to be deliberately misrepresented, the insurer can avoid the policy so that it is ineffective. It is unlikely that you will receive a refund on your premium," explains Office Assistants.

"If the misrepresentation is found not to be deliberate, and you can produce evidence that you tried to ascertain the facts that have since come to light, the insurer has options based on the situation. If it can prove that the policy would not have been issued at all if the facts had been known at the time, it can avoid the policy and refuse the claims, but the premium must be repaid. If the risk would have been accepted and a policy written with different terms, the contract should continue as if those terms were included. And if the premium would have been higher, claim settlements can be reduced by an appropriate proportion.

"Some insurance contracts depend on action that you agreed to undertake at the time they were written, such as changing or adding locks or alarms. The law regarding non-compliance on this has now changed so that insurers can no longer cancel the policy completely and avoid any claims, but only suspend the policy when the breach of the warranty is discovered until you fulfil the requirements. You will then still be insured under the same policy. It will, of course, be advisable to document proof of compliance with the warranty with relevant dates noted."

Wise small business owners will want to be confident that they have the right evidence in place regarding both their disclosures and their warranties.

Office Assistants offers bookkeeping services and much more to clients throughout the south east of England from their base in Rainham, Essex. For more information visit http://www.officeassistants.org.