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Time insurers joined 21st Century


Insurance policy

Insurance policy

Insurance policy

The Law Reform Commission (LRC) has hit out at bad practices by insurance companies that use smallprint and archaic rules from centuries ago to avoid paying out on claims.

One of these is non-disclosure, which is supposed to apply when you deliberately avoid telling your insurance company about, say, penalty points or a serious illness but will be used to repudiate a claim even when it has nothing to do with the event being claimed for.

For example, not having a burglar alarm on your house can void your home insurance, even if your claim is for fire damage. On an illness policy, a minor procedure a few years ago may stop a claim for cancer now.

Many policies carry catch-all questions asking for disclosure of anything the customer believes to be a "material fact", leaving clients in impossible situations.

The LRC recommends banning such binding conditions, allowing remedies for innocent errors by consumers and altering the concept of "insurable interest", or who can take out a policy on whom.

At present, you must have a financial interest in a policy, but many people are paying mortgages for others (parents sometimes do for adult children) and can't take out life insurance to cover this. The LRC moves will be met with some hostility from the industry, but hopefully it will persevere and bring contracts into the 21st Century.