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Section 18(4) of the Consumer Insurance Contracts Act 2019 (CICA) has now been brought into effect.
While most provisions of CICA were commenced in phases during 2020 and 2021 (see our earlier briefings on CICA commencement here and here), section 18(4) remained uncommenced and was subsequently amended by section 9 of the Insurance (Miscellaneous Provisions) Act 2022 (2022 Act) (see our earlier briefing on the 2022 Act here). Following these amendments, the provision has now commenced with effect from 13 May 2026, pursuant to SI 203 of 2026.
Purpose of Section 18(4)
Section 18 contains provisions on proportionate remedies and claims handling. Subsection 18(4) is intended to provide protection, in contracts of insurance involving two or more consumer co-insureds, to an innocent co-insured where another co-insured has caused damage to the insured property through a criminal or intentional act or omission.
Specifically, where such a contract of insurance contains an exclusion for loss or damage to property caused by the criminal or intentional act or omission of a co-insured, that exclusion shall only apply to the consumer whose actions caused the loss or damage (or the consumer who abetted or colluded in, or consented to, the act or omission or who ought to have known that the act or omission would cause the damage).
Limits to Section 18(4)
Nothing in Section 18(4) of CICA shall allow the co-insured to recover more than their proportionate interest in the lost or damaged property. Furthermore, these provisions shall not affect the operation of exclusion clauses for loss or damage to property caused by war, terrorism, nuclear attack or cyberattack.
Obligation to Cooperate
A co-insured consumer benefiting from the operation of section 18(4) of CICA is obliged to cooperate with the insurer in respect of the investigation of the loss, including, if requested by the insurer, providing a statutory declaration and producing documents related to the loss, as specified by the insurer.
Key Takeaway
Section 18(4) of CICA introduces targeted protection for innocent co‑insureds, limiting the application of exclusion clauses and requiring careful consideration in claims handling.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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