Consumer Insurance (Disclosure and Representations) Act 2012
Consumer Insurance (Disclosure and Representations) Act 2012
2012 CHAPTER 6
An Act to make provision about disclosure and representations in connection with consumer insurance contracts.
[8th March 2012]
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:-
Main definitions
1 Main definitions
In this Act-
(a) an individual who enters into the contract wholly or mainly for purposes unrelated to the individual's trade, business or profession, and
(b) a person who carries on the business of insurance and who becomes a party to the contract by way of that business (whether or not in accordance with permission for the purposes of the Financial Services and Markets Act 2000);
"consumer" means the individual who enters into a consumer insurance contract, or proposes to do so;
"insurer" means the person who is, or would become, the other party to a consumer insurance contract.
Pre-contract and pre-variation information
2 Disclosure and representations before contract or variation
(1) This section makes provision about disclosure and representations by a consumer to an insurer before a consumer insurance contract is entered into or varied.
(2) It is the duty of the consumer to take reasonable care not to make a misrepresentation to the insurer.
(3) A failure by the consumer to comply with the insurer's request to confirm or amend particulars previously given is capable of being a misrepresentation for the purposes of this Act (whether or not it could be apart from this subsection).
(4) The duty set out in subsection (2) replaces any duty relating to disclosure or representations by a consumer to an insurer which existed in the same circumstances before this Act applied.
(5) Accordingly-
(a) any rule of law to the effect that a consumer insurance contract is one of the utmost good faith is modified to the extent required by the provisions of this Act, and
(b) the application of section 17 of the Marine Insurance Act 1906 (contracts of marine insurance are of utmost good faith), in relation to a contract of marine insurance which is a consumer insurance contract, is subject to the provisions of this Act.
3 Reasonable care
(1) Whether or not a consumer has taken reasonable care not to make a misrepresentation is to be determined in the light of all the relevant circumstances.
(2) The following are examples of things which may need to be taken into account in making a determination under subsection (1)-
(a) the type of consumer insurance contract in question, and its target market,
(b) any relevant explanatory material or publicity produced or authorised by the insurer,
(c) how clear, and how specific, the insurer's questions were,
(d) in the case of a failure to respond to the insurer's questions in connection with the renewal or variation of a consumer insurance contract, how clearly the insurer communicated the importance of answering those questions (or the possible consequences of failing to do so),
(e) whether or not an agent was acting for the consumer.
(3) The standard of care required is that of a reasonable consumer: but this is subject to subsections (4) and (5).
(4) If the insurer was, or ought to have been, aware of any particular characteristics or circumstances of the actual consumer, those are to be taken into account.
(5) A misrepresentation made dishonestly is always to be taken as showing lack of reasonable care.
Qualifying misrepresentations
4 Qualifying misrepresentations: definition and remedies
(1) An insurer has a remedy against a consumer for a misrepresentation made by the consumer before a consumer insurance contract was entered into or varied only if-
(a) the consumer made the misrepresentation in breach of the duty set out in section 2(2), and
(b) the insurer shows that without the misrepresentation, that insurer would not have entered into the contract (or agreed to the variation) at all, or would have done so only on different terms.
(2) A misrepresentation for which the insurer has a remedy against the consumer is referred to in this Act as a "qualifying misrepresentation".
(3) The only such remedies available are set out in Schedule 1.
5 Qualifying misrepresentations: classification and presumptions
(1) For the purposes of this Act, a qualifying misrepresentation (see section 4(2)) is either-
(a) deliberate or reckless, or
(b) careless.
(2) A qualifying misrepresentation is deliberate or reckless if the consumer-
(a) knew that it was untrue or misleading, or did not care whether or not it was untrue or misleading, and
(b) knew that the matter to which the misrepresentation related was relevant to the insurer, or did not care whether or not it was relevant to the insurer.
(3) A qualifying misrepresentation is careless if it is not deliberate or reckless.
(4) It is for the insurer to show that a qualifying misrepresentation was deliberate or reckless.
(5) But it is to be presumed, unless the contrary is shown-
(a) that the consumer had the knowledge of a reasonable consumer, and
(b) that the consumer knew that a matter about which the insurer asked a clear and specific question was relevant to the insurer.
Specific issues
6 Warranties and representations
(1) This section applies to representations made by a consumer-
(a) in connection with a proposed consumer insurance contract, or
(b) in connection with a proposed variation to a consumer insurance contract.
(2) Such a representation is not capable of being converted into a warranty by means of any provision of the consumer insurance contract (or of the terms of the variation), or of any other contract (and whether by declaring the representation to form the basis of the contract or otherwise).
7 Group insurance
(1) This section applies where-
(a) a contract of insurance is entered into by a person ("A") in order to provide cover for another person ("C"), or is varied or extended so as to do so,
(b) C is not a party to the contract,
(c) so far as the cover for C is concerned, the contract would have been a consumer insurance contract if entered into by C rather than by A, and
(d) C provided information directly or indirectly to the insurer before the contract was entered into, or before it was varied or extended to provide cover for C.
(2) So far as the cover for C is concerned-
(a) sections 2 and 3 apply in relation to disclosure and representations by C to the insurer as if C were proposing to enter into a consumer insurance contract for the relevant cover with the insurer, and
(b) subject to subsections (3) to (5) and the modifications in relation to the insurer's remedies set out in Part 3 of Schedule 1, the remainder of this Act applies in relation to the cover for C as if C had entered into a consumer insurance contract for that cover with the insurer.
(3) Section 4(1)(b) applies as if it read as follows-
"(b) the insurer shows that without the misrepresentation, that insurer would not have agreed to provide cover for C at all, or would have done so only on different terms."
(4) If there is more than one C, a breach on the part of one of them of the duty imposed (by virtue of subsection (2)(a)) by section 2(2) does not affect the contract so far as it relates to the others.
(5) Nothing in this section affects any duty owed by A to the insurer, or any remedy which the insurer may have against A for breach of such a duty.
8 Insurance on life of another
(1) This section applies in relation to a consumer insurance contract for life insurance on the life of an individual ("L") who is not a party to the contract.
(2) If this section applies-
(a) information provided to the insurer by L is to be treated for the purposes of this Act as if it were provided by the person who is the party to the contract, but
(b) in relation to such information, if anything turns on the state of mind, knowledge, circumstances or characteristics of the individual providing the information, it is to be determined by reference to L and not the party to the contract.
9 Agents
Schedule 2 applies for determining, for the purposes of this Act only, whether an agent through whom a consumer insurance contract is effected is the agent of the consumer or of the insurer.
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