Posted on November 4, 2013
The Law Commission has recently been looking at warranties in insurance policies and how these are applied. They have now made several recommendations which have been endorsed by AIRMIC (Association of Insurance and Risk Managers in Industry & Commerce).
Warranties are applied by insurers to policies where they need specific action to be taken – for example they may apply a warranty to say that a flat roof must be inspected by a professional every 5 years or that cooking extraction ducts must be cleaned annually. However if these conditions are not complied with, there is a breach of the warranty. This breach means that the insurer can cancel or “void” the policy – effective from the date of the breach.
The Law Commission has recommended that rather than allowing the insurer to void the policy, warranties should become “suspensive conditions” which means that once the required action has been taken – for instance the roof being inspected – the cover is reinstated.
Although this action, and other recommendations are being supported by the Law Commission and AIRMIC it may be some years before the recommendations become law.
In the meantime – your insurance professional should always be bringing to your attention any warranties that have been applied by insurers and be making you aware of the consequences of non-compliance.
Pii actively challenge insurers who wish to apply warranties to our clients policies and try to find alternative solutions as a compromise for all.