New law shakes up insurance buying process

It’ll now be harder for insurers to turn down claims on the grounds of the non-disclosure of relevant information, thanks to the first change in the UK’s insurance contract law in more than 100 years.


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The Consumer Insurance Act came into force on April 6, and is the first major legal change the industry has seen regarding non-disclosure since 1906. It should mean greater protection for consumers, provided they do not deliberately lie to an insurer about their circumstances.

Here’s a quick Q&A on what the Act entails and how it will affect the way you buy car, home or any other kind of insurance.

What’s changing?

When you buy insurance now, the insurer will have to ask you a series of questions to find out specific details about your circumstances. The Consumer Insurance Act will then protect you if you unwittingly give them incorrect or incomplete information – since they should have asked you specifically for it.

It means that the insurer won’t be able to turn down a claim on the grounds that you failed to disclose certain bits of information – basically shifting the onus to them to ask for the information, rather than on you to volunteer it.

Of course the Act won’t protect you if you carelessly or deliberately lie about your circumstances.

Why is it changing?

Given that contract law around buying insurance hasn’t changed in more than a century, it’s probably high time it was updated.

That’s not to say insurance has stayed the same since 1906 – because insurers have been continuously improving their proposal forms to make things easier and clearer for customers.

And there have been other movements too, such as the Association of British Insurers’ (ABI) code of practice on non-disclosure, designed to reduce the number of claims that get turned down because the insurer says the customer failed to disclose important information.

The ABI said: “We want customers to take out insurance policies with the confidence that they are covered. By placing a legal duty on insurers to ask customers all relevant questions at point of sale, people will know exactly what they need to disclose upfront.”

The Act has also been introduced to help insurers tackle fraudulent claims, by making sure the questions asked by insurers are clear-cut enough to stop people from providing false information on purpose.

Which insurance products are affected?

The Act affects any personal insurance policies, so things like car, home, travel, health, pet, life, critical illness and income protection insurance. It also applies to pension annuities.

You’ll be protected regardless of where you buy cover, whether it’s from a broker, directly from an insurer or through our insurance channel or other comparison websites.

Will I notice the change?

As the onus to get all the relevant information is on the insurer, you probably won’t notice a great deal of difference due to the Consumer Insurance Act – especially since insurance providers and industry bodies have been refining their approach over the past 30 years to make sure consumers get a fair deal.

The Act itself will just set an official, industry-wide standard for insurers to abide by.

Can insurers still turn down a claim for non-disclosure?

Yes, there will still be circumstances where a claim is turned down because a customer failed to disclose the correct information – but only in instances where the customer deliberately, carelessly or recklessly gives incomplete or incorrect information to the insurer.

Basically, if you’re intentionally lying or withholding the truth about your circumstances, you could still have your claim rejected.

This means it’s important to make sure you answer each of the insurer’s questions to the best of your knowledge, and if you’re unsure of something you need to ask your insurer about it directly.

What about renewals?

The Consumer Insurance Act will also apply to any policy renewals after April 6, which means you must check the renewal notice carefully and report any inaccuracies to the insurer. Failure to do so could result in your claims being rejected on the grounds of non-disclosure.

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