New consumer legislation designed to remove “vicious devices and traps for the unwary” from insurance contracts has been recommended by the Law Reform Commission.
In a report published today, the commission recommends warranties should be abolished from insurance contracts, changes should be made to the duty of disclosure and there should be proportionate remedies for innocent or negligent mistakes by consumers.
The aim of the Report on Consumer Insurance Contracts, part of the commission’s third programme of law reform, is to “reform and rebalance” the duties of insurers and consumers, including small businesses, the commission has said.
The commission president, retired High Court judge Mr Justice John Quirke, told The Irish Times it was “ridiculous” that an insurance company could refuse to pay out household insurance after a fire on the basis, for example, that the householder did not have a burglar alarm.
Under current legislation, this is permitted where the requirement to have the alarm was a “warranty” or condition of the contract, but should be abolished.
“A number of English courts have described warranties as ‘vicious devices and traps for the unwary’; they are not very popular in the courts,” Mr Justice Quirke said.
He said insurance contract law caused problems for consumers mainly because most laws had their origins in the 16th and 17th centuries, when sailing ships were crossing the Atlantic and the contents were being insured.
They were “hammered out between people who had equal bargaining powers”, he said.