Campaigners say thousands of claims are rejected because of the law
The Scottish Law Commission has called for a change in insurance law which it says is outdated and puts too much onus on the consumer.
The current law is 103-years-old and was designed for ship owners insuring large vessels.
It expects consumers to disclose any information they think might be important when applying for a policy even if they are not asked for it.
Campaigners have said the current law has led to many claims being rejected.
The Scottish Law Commission along with the Law Commission for England and Wales have recommended a number of changes to legislation.
Among them, they have said they want insurers to ask questions about any matter which they want to know about so they can assess the risk being insured.
The two legal bodies said they also wanted consumers who have taken reasonable care to answer insurers' questions fully and accurately to get claims paid in full and only be refused a pay-out if they have answered questions dishonestly or recklessly.
Professor Hector MacQueen, the Commissioner leading the project at the Scottish Law Commission, said although the majority of insurers had already adopted guidelines in line with the recommendations, this would force the minority to do the same.
He added: " We think that the clarification of the rights and duties of insurer and insured alike will reduce the number of claims which are rejected unfairly."
The recommendations followed detailed consultation with various consumer groups as well as those in the insurance industry.
The Association of British Insurers (ABI), whose members provide around 90% of domestic insurance services, has confirmed that it does not oppose reform.
Nick Starling, at the ABI said: ""We are pleased that the Law Commission's proposals to reform the law are very similar to recent codes and best practice which ensure that customers are treated fairly."
The Commission has made its recommendations to the government and said it awaited a response.