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Insurance contract law reform: Business Insurance – Law Commission consultation, summary of responses

The Law Commission has published summaries of responses to their third consultation paper: The Business Insured's Duty of Disclosure and the Law of Warranties.

The responses received showed strong support for the Law Commission's key proposals in respect of both disclosure and warranties.

In relation to the business insured's duty of disclosure the proposals aim to clarify how policyholders are expected to comply with the duty when presenting a risk to insurers and to encourage insurers to assist them in that task. Fairer remedies are also proposed for breach where the policyholder has not been dishonest.

In relation to warranties, the Law Commissions had stated that their proposals were cautious. Their original proposal that a causal connection test be introduced was abandoned. Instead, the proposals aim to prevent an insurer from refusing a claim for breach of a warranty where the breach has already been remedied, or where the term was designed to cover other sorts of loss.

Policies in these areas will now be developed in light of this general consensus and with consideration of the detailed comments and queries received from consultees. A final report and draft Bill on (i) Post contract duties and other issues and (ii) The business insured's duty of disclosure and the law of warranties is intended for December 2013.

A diagram illustrating the project, including past and future publications, is available on the Law Commission's project page.

For further information please contact Fiona James or Marcus Davies, Professional Support Lawyers.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.