Under the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA), in which scenario does an insurer have a compensatory remedy for misrepresentation?

Under the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA), an insurer is granted a compensatory remedy when the misrepresentation is classified as careless. This means that if a consumer fails to provide accurate information to the insurer because of carelessness, the insurer has grounds to maintain their rights and seek compensation.

The Act recognizes that not all misrepresentations are made with the same intent or awareness. Careless misrepresentation implies that the consumer did not take reasonable care in presenting their information, which can lead to a situation where the insurer may not have been able to make an informed decision. As a result, giving the insurer a compensatory remedy helps maintain a balance of fairness; it acknowledges that while the consumer may not have intended to deceive, their lack of diligence has negatively affected the insurer's position.

In contrast, reckless or deliberate misrepresentations indicate a higher level of fault or intent to deceive, which could lead to more severe consequences, including potentially voiding the policy without any compensation. An honest and reasonable misrepresentation typically would not warrant a remedy since it implies the consumer made accurate representations to the best of their understanding, thus protecting their interests more robustly under the law.