Damages for late payment

The insurer's obligation to pay a claim within a reasonable time arises out of a term implied into the contract of insurance. The insured will have to establish that its damages were caused by the late payment and that it mitigated its loss. A contracting party may, however, be entitled to recover damages for late payment of a debt due under a contract, subject to the ordinary principles of remoteness and mitigation. In their July 2014 Report, the Law Commissions said that this rule had not been followed in other common law jurisdictions, or in Scotland, that it was unprincipled and unfair, and should be reformed. Part 5 of the Enterprise Act introduced new sections into the Insurance Act and those section numbers will be used when discussing the new law. Section 13A(1) Insurance Act sets out the term that is implied into all contracts of insurance entered into on or after 4 May 2017.