Insurers will no longer be able to void commercial policies out of hand in the event of a non-disclosure under Insurance Act 2015, a lawyer has said.

According to Jonathan Drake, partner at Bond Dickinson, under the current legislation if the insured party fails to disclose a "material fact" the insurer is entitled to void the policy regardless of whether the breach is deliberate or reckless.
Speaking at the seminar "Preparing now for the Insurance Act", organised by Bond Dickinson, Drake said under the new regime if the breach was not deliberate or reckless, insurers could only void the policy if the material fact would have prevented the policy been issued in the first place.
He said if the insurer would have written the risk but on different terms and conditions had they been aware of the material fact, under the new law the policy must be treated as if it had been written on those terms.
If the insurer would have written the risk but for a higher premium, the insurer may reduce the claim "proportionately".
"For example, if the insurer would have charged a premium that was 50% higher, it would be entitled to reduce the claim amount by 50%," he explained.
Another key change under the Act is breach of warranty. Drake said under the current legislation, insurers were entitled to terminate the contract from the day of a breach of warranty.
However, under the new Act, the liability of the insurer will only be suspended until the breach is fixed.
The Act also allows insurers to "contract out", meaning to introduce less favourable terms to the insured. However, Drake said both parties of the policy would have to agree on contracting out.
"For you to be able to contract out, you have to take sufficient steps to draw the terms to the attention of the insured before the policy is concluded," he said.
Drake added that the insurer must ensure the disadvantageous term would be "clear and unambiguous as to its effect".
The new rules also give insurers more flexibility in how they deal with fraudulent claims.
The new regime will take effect on 12 August 2016.