Insurance Law Monthly

The Insurance Act 2015, which came into force on 12 August 2016, recasts the existing rules of utmost good faith set out in sections 17 to 20 of the Marine Insurance Act 1906 and replaces them with a regime based on proportional remedies rather than an absolute right for the insurers to avoid liability. Insurers have nevertheless long recognised that reliance on strict legal rights is not always appropriate, and express clauses modifying those rights are commonly found.

The Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003, implementing the EU’s Fourth Motor Insurance Directive, provide for the payment of compensation by the MIB where a British resident is injured in a motor vehicle accident in another country in the European Economic Area. The Regulations make separate provision for compensation where there is an identified insurer and where there is no identified insurer.

The EU’s five Motor Insurance Directives, now brought together in the Consolidated Motor Insurance Directive 2009, seek to ensure that an individual injured by a motor vehicle anywhere in the EU is entitled to seek compensation in his or her home member state. The relevant provisions, originally set out in the Fourth Motor Insurance Directive, were implemented in the UK by the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003.

Under the Marine Insurance Act 1906, where a vessel has been damaged the amount recoverable by the assured depends upon whether there is a total loss (in which case the assured receives the sum insured) or a partial loss (in which case the assured recovers reasonable repair costs). Non-marine law draws a sharp distinction between damage that can be repaired (partial loss) and damage that cannot be repaired (total loss), whereas marine law alone recognises an intermediate possibility of loss that is repairable but not worth repairing (constructive total loss).