Why Should The Decision Maker Purchase An Insurance Policy?
Insurance & The 'Decision Maker'.
At Higos, we understand when it comes to buying insurance the process can be overwhelming. Nonetheless, whether you require personal or commercial insurance, it’s important to remember to obtain an accurate insurance quotation, the ‘decision maker’ will be considered most likely to have a significant understanding of their own needs. Without the ‘decision maker’ providing the correct information, cover can be misrepresented and could potentially void or reduce a personal and commercial insurance claims pay out and for commercial insurance can increase the risk of a Directors & Officers claim.
What Is A ‘Decision Maker’?
The 'decision maker' would typically have insurable interest and would be responsible for the accuracy and completeness of all the information provided to their insurer. The 'decision maker' could be a consumer, a trade, business professional, individual or a group of individuals who are typically responsible for making important decisions.
What Is A 'Fair Presentation Of Risk' For Commercial Insurance?
Before a commercial insurance policy can be taken out, the 'decision maker' has a duty to give a ‘fair presentation of risk’ to their insurer. This means under the Insurance Act 2015 they must act with utmost good faith and disclose all material facts that the 'decision maker' would know or be obliged to know to their insurer. Reasonable searches must also be conducted to ascertain all material facts within your organisation, making enquiries of senior management and other relevant individuals where necessary.
A material fact or circumstance is important information that is considered vital if it would influence an insurer’s judgment in determining whether to accept the risk, or the terms of the insurance (including premium). If you are in any doubt whether a circumstance is material, we recommend that it should be disclosed. These can include previous claims history, security, criminal convictions, bankruptcy and insolvency. So whether you’re changing, renewing or purchasing a new policy, the ‘decision maker’ could be considered as the most suitable in providing a ‘fair presentation of risk’. It's also important to remember any changes to material facts or material circumstances throughout the term of an insurance policy must be advised to an insurer. Check your policy wording for any endorsements or additional terms and conditions.
What Happens If A 'Decision Maker' Fails To Make A 'Fair Presentation Of Risk'?
If the ‘decision maker’ fails to make a ‘fair presentation of risk’ by not disclosing all material facts and circumstances for their commercial insurance policy, the following could happen:
- Failure to disclose a material circumstance may entitle an insurer to impose different terms on your cover.
- They may proportionately reduce the amount of any claim payable.
- In some circumstances an insurer will be entitled to void the policy from inception
- If in the event a policy is void from inception any claims under the policy would not be paid.
- The insurer may retain the insurance premium, depending on the circumstances as to whether the decision maker were aware of any potential material facts.
- The insurer may increase the insurance premium and increase any excess.
- Directors & Officers claims may increase if a Director & Officer fails to disclose material facts they could be held liable for a breach of a their duties as a company owner and could face fines and criminal offenses.
What Is 'Duty Of Disclosure' For Personal Insurance?
Before a personal insurance policy can be taken out, under the Consumer Insurance (Disclosure and Representations) Act 2012, a consumer (who is unrelated to an individuals trade, business or profession) has a 'duty of disclosure' to take reasonable care to answer questions fully and accurately and to ensure that any information volunteered is not misleading. So whether you’re changing, renewing or purchasing a new personal insurance policy, the ‘decision maker’ has a 'duty of disclosure' to ensure the information they provide is accurate and honest. It's important to remember this duty exists before cover is placed, when it is renewed, and at any time that is it varied, and your policy wording may provide that it continues for the duration of the policy.
What Happens If The 'Decision Maker' Fails To Provide A 'Duty Of Disclosure'?
If the ‘decision maker’ fails to provide a 'duty of disclosure' by not providing accurate and honest material facts and circumstances for their personal insurance policy, the following could happen:
- The insurer may be able to impose different terms on your cover and add additional endorsements, conditions or warranties.
- The insurer can void the insurance policy from inception and treat that it never existed.
- The insurer may retain the insurance premium, depending on the circumstances as to whether the decision maker were aware of any potential material facts.
- The insurer may void an insurance claim or they may reduce the amount of a claim payment.
- The policy premium could increase.
What Is The Insurance Act 2015?
On the 12th August 2016 the Insurance Act 2015 came into effect as legislation and is designed to make insurance clearer and fairer for the relationship with an insurer and rules regarding when an insurer is allowed to reject a claim.
What Is The Consumer Insurance (Disclosure and Representations) Act 2012?
On the 6th April the Consumer Insurance (Disclosure and Representations) Act 2012, came into effect as legislation and is designed to provide more protection and support to consumers when taking out or renewing a personal insurance policy.
Bespoke Personal & Commercial Insurance
At Higos, we love different. It’s what makes our insurance world go around. So, while other insurers may try to sell you a one size fits all solution - or even turn you away - our friendly experts will take the time to understand your situation and find a solution that’s tailored to your needs. So, you can be sure you’re fully protected and not paying for personal or commercial insurance cover you don’t need.
If the unexpected should happen, we have a friendly in-house claims team ready to provide a prompt and personal service.
For advice or a quotation for personal insurance or commercial insurance get in contact with us at Higos. Alternatively fill out our online request a call-back form and a member from our specialist insurance team will call you back.