A new law that creates a legal obligation for insurers to pay claims to businesses within a reasonable timeframe starts from May 2017.
As part of the Enterprise Act 2016, policyholders will have the right to claim damages and interest in the event of a late claim payment.
The new measures applies to any business insurance policy placed or renewed on or after 4 May 2017 in the UK.
Currently, there is no clear requirement for insurers to pay undisputed claims to businesses within a reasonable timeframe.
It will give policyholders a contractual right to the payment of insurance claims within a reasonable time and provide for general damages and interest to be payable by an insurer where a policyholder suffers additional loss because of the insurer's unreasonable delay in payment.
What constitutes a 'reasonable' time frame will be case specific.
The bill is expected to be a significant benefit to many small companies, giving them peace of mind, and also helping them recover faster from incidents such as fires and floods.
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