Successfully negotiating claims since 1867
Most of us are now familiar with the various provisions of the 2012 and 2015 Acts relating solely to insurance contracts. Perhaps less well known is the protection afforded to insurance consumers – private individuals insuring in a private capacity – by the Consumer Rights Act 2015. We all know that insurance contracts were, after lobbying by the industry, specifically excluded from successive unfair contract terms legislation, although the EU came to consumers’ help following the enactment of the Unfair Terms in Consumer Contracts Regulations in the 90s.
The current legislation replaces those regulations and deals with unfair terms. As one might expect, the Act goes into some detail about what “fair” and “unfair” mean, and in repeating criteria brought over from earlier legislation provides scope for lengthy and potentially expensive legal argument and interpretation.
However, there is very strong support for a policyholder in the admirably clear S.69. (1). This simply says that “If a term in a consumer contract, or a consumer notice, could have different meanings, the meaning that is most favourable to the consumer is to prevail.” This is an objective statement. It doesn’t require interpretation of an unclear or ambiguous term to decide what it really says. Instead, it focusses on difference. If insurers reasonably think a term means A, but a policyholder has a reasonable belief that it means B, there is no longer a need to decide which of A and B is the intended or the more probable meaning.
The mere presence of different understandings reasonably held allows the policyholder’s to prevail – without further discussion. All the policyholder has to show is that the term could have different meanings. This is, we think, a stronger, expanded application of the traditional contra proferentem rule of interpretation in that it lightens the policyholder’s burden of proof and is certainly expressed with much greater clarity.
At Thompson and Bryan’s Contentious Claims Division we have found this a very useful tool in our armoury when disputes arise between an insurer and a consumer on what a policy means. And, so far, few insurers seem to have understood this protection for their policyholders. We’re changing that.