Misrepresentation, Non-Disclosure and Breach ... - Law Commission

• We propose that businesses should continue to have a duty to volunteer
information, but the duty should be limited to facts that a reasonable insured
in the circumstances would realise the insurer wanted to know about (paras
5.24 – 5.48).
• A business that answers questions or provides information honestly and takes
reasonable care should be protected (paras 5.49 – 5.84).
• We ask whether, for businesses, the law should distinguish between
dishonest and negligent conduct. Where a business has made a negligent
non-disclosure or misrepresentation, should the insurer be placed in the
position it would have been in had it been aware of the full facts, along the
lines recommended for consumer cases (paras 5.85 – 5.108)?
1.13 Under our proposals, insurers and businesses would be free to agree different
rules. However, we propose special controls which would prevent insurers from
contracting out of the default regime in standard term contracts to the extent that
the terms altering the default position have not been made clear to the insured
and would defeat the insured’s reasonable expectations (paras 5.109 – 5.147).
Group insurance and insurance on the life of another
1.14 Group insurance schemes are typically those where an employer arranges
insurance for the benefit of employees and, sometimes, their partners and
dependants. The current law does not deal with this situation and insurers have
developed principles of good practice to deal with group insurance. We propose
reform to bring the law into line with that good practice (paras 6.3 – 6.41).
1.15 We also propose that where the policyholder insures someone else’s life, a
misrepresentation by the person whose life is insured should be treated as if it
were a misrepresentation by the policyholder (paras 6.53 – 6.75).
WARRANTIES AS TO THE FUTURE
1.16 Under current law, where a policyholder gives a warranty about future actions,
any breach will discharge the insurer from all further liability, even in respect of
claims which have no connection with the breach. We propose that the following
rules should apply to all warranties as to the future:
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