When we work with businesses after they’ve suffered a loss as a result of a fire or flood, we know how important it is to finalise their insurance claim as quickly as possible to minimise damage to their trading. Any delays in the process – particularly any delaying tactics by their insurer – can pose a serious threat to their future liquidity.
So it’s very good that the Government is proposing a law to clamp down on these unreasonable delays. The Enterprise Bill, which went through its first reading in the Commons last week, will place a contractual requirement on insurers to pay claims to businesses within a ‘reasonable time’. Insurers would have to pay damages to the policyholder if additional losses have occurred because of this unreasonable delay.
The Bill is now before the House of Lords and will receive its second reading in the Commons in October. Comprising a wide range of measures to support small businesses, the section on insurance aims to:
- Introduce into every contract of insurance a requirement on the insurer to pay sums due within a reasonable time.
- Ensure that the law incentivises insurers to pay within a reasonable time, and to promote payments within a reasonable time.
- Give policyholders a legal right to enforce prompt payment of insurance claims.
- Provide for limited compensation to be payable by an insurer where a policyholder suffers additional loss because of the insurer’s unreasonable delay in payment.
Making a commercial insurance claim is complicated enough, without unreasonable delays making it even worse. So we support anything which can help this process, but we would always advise firms to get expert help with their claim from a loss assessor. This can make all the difference to whether or not they receive their full entitlement and ensure that their business survives.