The Marine Insurance Act 1906 may be over 100 years old, but a very important part of this act is still used today in almost every insurance policy sold in the UK. This part is to do with the duty of disclosure on insurance policies.

Insurance is sold as “uberrimæ fidei” which means it is based on the utmost good faith of both parties. On an insurance policy, the insured is expected to provide any material facts which is information that may be deemed relevant to the risk that is being insured. If you do not disclose all material facts then the insurer is within their rights to reject your claim even if they did not ask you the specific question in the insurance proposal. It is this act that probably gives the insurance industry their bad image of “getting out of anything” when it comes to claims.

A recent movement has been made to abolish this act which would mean that you would only need to tell the insurer what they ask you. This means that every insurance claim would have to be paid out as long as it is part of what is covered in the insurance policy and you have told the truth in the questions asked at the time of proposal. With the “get out clause” not existing, it may give the insurance industry a better name along with policyholders having a more secure policy.

The only downside is that with the insurer having to pay out more claims, they will inevitably have to pass these costs on to the consumers which means an increase in insurance premiums for us all. The change is currently only at the draft stage but it is likely it will go to parliament early next year and if passed it will effect almost every insurance policy sold here in the UK.