One of the biggest shakeups to the insurance sector in recent memory comes into force tomorrow.
The Insurance Act 2015 was granted Royal Assent 18 months ago. However, the bulk of its provisions, including creating a new duty for those insured to make a "fair presentation" of their risk and changing the way warranties are treated, come into effect tomorrow.
"Policyholders should benefit as insurers' ability to refuse claims in totality is restricted, a completely new and additional remedy of proportional claims payments is now made available to policyholders, and the draconian impact of certain insurance terms is removed," said Stephen Netherway, insurance partner with law firm CMS. "It's the insurance equivalent of the pulling down of the Berlin Wall."
Meanwhile, Nigel Brook, partner at Clyde & Co, added: "Some of the changes will take time to bed down and over the next few years we are likely to see certain sections tested in the courts."
However, potential policyholders should still be wary before they sign on any dotted lines as the legislation does allow for contracting out of the new rules for non-consumer deals.
"English law generally favours freedom of contract and the new Act is no exception," said Ian Lupson of Jones Day, but added the new law represented a good deal for corporates on the whole.