In 2005 the Law Commission and Scottish Law Commission’s scoping paper on proposals to reform insurance contract law in England, Wales and Scotland asked for responses as to whether section 83 of the Fires Prevention (Metropolis) Act 1774 should be repealed.

Section 83 allows interested parties in houses or other buildings damaged by fire to demand that insurance money is used to reinstate the property rather than be paid to the policyholder. The act was introduced largely to deter insurance fraud and arson. Tenants, mortgagees, landlords and purchasers (for example) might all apply to the insurer under section 83 to have the property reinstated.

Section 83 may provide some benefit to tenants where a landlord has become insolvent. Monies paid out for reinstatement are unlikely to be treated as the insolvent policyholder’s and can be applied directly for the purpose of rebuilding or repairing the property.

In the introductory paper the Law Commissions state that section 83 has not been applied for its original purpose - namely to prevent a policyholder gaining from an insurance fraud where an interested party has suffered the loss of a building. Despite there being fewer than ten cases since 1900 which mention section 83, the Commission raise whether the law should be reformed. They state that their tentative view is to leave the law as it stands as section 83 still has the capacity to provide a just resolution to a small number of possible cases.

The Commissions would like to receive responses to their introductory paper by 8 June 2009.  

For further information: Section 83 of the Fires Prevention (Metropolis) Act 1774