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Insurers can’t penalise our genuine mistakes any more

I run an informal history club and the Georgian period is one of my favourite periods. However, there’s one leftover slice of Georgian law that I’ll be pleased to see the back of – current consumer insurance law.

The law was originally designed to govern face-to-face insurance deals in the coffee houses of Georgian London. However, it has been the basis for consumer insurance law – influencing decisions on your household, motor, critical illness or life insurance – until it was overhauled last week.

There are a couple of cases where consumers have unwittingly fallen foul of this law.

Back problems prevent payout for heart attack

One case that was referred to the Financial Ombudsman was of a man who had made a claim under his critical illness policy after suffering a heart attack. The insurer avoided the policy and rejected the claim, as he had failed to disclose unconnected problems with his back and neck when he applied for the insurance.

Another case was that of a man who made a claim under his household policy following a burglary. The insurer avoided the policy as the man had wrongly described the locks on his door as meeting its requirements – even though there was no connection between the type of locks and the claim that he had submitted. To add insult to injury, the locks had been fitted by the insurer’s own contractors following an earlier loss!

Onus on insurers to gather medical history

Unfair occurrences such as those I’ve mentioned should soon become a thing of the past.

The onus will now be on insurers to ask the right questions, and consumers will need to answer those fully and honestly, but won’t be penalised for reasonable mistakes. A payout can only be refused therefore if a breach of the statutory duty is deliberate or reckless.

Which? worked with a number of other organisations and individuals to campaign for this change in the law, including the British Heart Foundation, Consumer Focus and UNLOCK.

Age UK welcome insurance law change

Jane Vass from Age UK explains why this is important for older people:

‘It’s been a long time coming, but we welcome this reform. Older people are often affected by the need to disclose pre-existing medical conditions, and it’s a real help that companies will now have to ask the questions, rather than relying on people to volunteer information that they might have no idea is relevant.’

In the end, no-one wins from having outdated law – consumers lose out by having reasonable insurance claims rejected, and the insurance industry loses out from a fall in trust and an unwillingness of consumers to take out insurance which they may actually benefit from.

Have you ever been refused a payout on an insurance policy because you didn’t disclose something that you thought was irrelevant? Will you feel more trusting of insurance companies in the future with this change in law?


Does this mean that the ancient doctrine of uberrimae fidei is being abandoned? About time too. “Utmost good faith” seemed to be a one-way street with most insurers.