Law on insurance for small businesses must be fair

Published on Sunday 8 November 2009 20:55

SMALL businesses across the UK have been "shocked and horrified" to find their insurance policies could be invalidated by small errors, according to consultation findings published by the Scottish Law Commission.

The responses, found in a joint investigation with the Law Commission of England on the law of insurance, reveal concerns policies can be rendered worthless if businesses fail to disclose any facts that the insurer might deem relevant.

At present, the insurer is not compelled to ask specific questions and the commissions propose that the law be changed so that "micro-businesses" with fewer than ten people are protected from the problem by only having to answer insurers' queries honestly.

Scottish Law Commissioner, Professor Hector MacQueen, who is leading the project for Scotland, said: "We believe that it is important that micro-businesses who often buy insurance in the same way as consumers are protected by a fair and proportionate law."

He said the bodies were now working on a joint policy statement that would set out their plans for reform.