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Category: Insurance case law · Reviewed by Al Jabbar, Broker · Specialist Risks · Last reviewed June 2026
Drake Insurance plc v Provident Insurance plc [2003] EWCA Civ 1834 — Court of Appeal (Civil Division), 2003.
Citation, court and year verified against the official judgment text published by The National Archives, Find Case Law (https://caselaw.nationalarchives.gov.uk/ewca/civ/2003/1834).
The case concerned a private motor insurance policy. Mrs Kaur held a policy with Provident Insurance plc in respect of a vehicle which was driven by her husband. At the time of placement Mr Kaur had a previous motor accident on his record. He believed in good faith that the accident was not his fault and that it had not resulted in a claim being met by his insurers, although in fact a small claim had been settled by his then insurer. The Provident proposal form was completed on the basis of his understanding.
Following a later road traffic accident a third party brought a claim and the insured’s insurer paid out under the compulsory motor insurance regime. Drake Insurance, which had a parallel interest in the matter through its role as the insurer of another party involved in the accident, sought contribution from Provident. Provident in turn purported to avoid the policy with Mrs Kaur on the ground of non-disclosure of the earlier accident and consequent claim.
The trial judge held that Provident was entitled to avoid the policy and that no contribution was owed. Drake appealed. The principal question for the Court of Appeal was whether Provident’s purported avoidance was effective, in circumstances where the non-disclosure was innocent and where there was evidence that Provident would in fact have written the risk on the same terms had the matter been disclosed.
The court was also required to consider the role of the duty of good faith as a continuing duty owed by both parties to an insurance contract, and the implications of that duty for an insurer’s exercise of the right of avoidance.
Two issues fell for decision. First, on the facts, was Provident entitled to avoid the policy with Mrs Kaur for non-disclosure of the earlier accident, where the underwriting evidence suggested that the risk would have been accepted on the same terms even if the matter had been disclosed? Second, in any event, was Provident’s purported avoidance consistent with the duty of good faith owed by an insurer to its insured at the time of considering its position on a claim?
The case provided an opportunity to consider the limits of the inducement requirement laid down in Pan Atlantic v Pine Top, and the role of good faith as a constraint on the insurer’s substantive remedies as well as the insured’s substantive duties.
The Court of Appeal held by a majority that Provident had not been entitled to avoid the policy. The evidence as to Provident’s underwriting practice indicated that, had the earlier accident and claim been disclosed, the policy would in any event have been written on the same terms. The non-disclosure had therefore not induced the underwriter in the sense required by Pan Atlantic, and avoidance was not available.
The court went further and held that an insurer’s exercise of the right of avoidance is itself constrained by the duty of good faith. An insurer who knows, or ought to know, that the non-disclosure relied on did not affect its underwriting decision cannot in good faith avoid the policy on that ground. Rix LJ in particular emphasised that the duty of good faith is reciprocal and continues throughout the life of the contract, although the scope of that continuing duty has subsequently been narrowed by the Insurance Act 2015.
Contribution was accordingly owed by Provident to Drake. The appeal was allowed.
An insurer cannot avoid a non-consumer or consumer insurance contract for pre-contractual non-disclosure unless the non-disclosure both meets the materiality test and actually induced the underwriter to write the risk on the terms agreed. Where the evidence demonstrates that the underwriter would have accepted the risk on the same terms had disclosure been made, the inducement limb is not satisfied and avoidance is not available.
The duty of good faith in insurance is reciprocal and continues during the currency of the contract. An insurer who exercises the right of avoidance in circumstances where it knows or ought to know that the non-disclosure did not affect its underwriting decision may itself be in breach of the duty of good faith.
Drake v Provident is the leading modern authority on the inducement requirement in the context of consumer and small commercial insurance, and on the duty of good faith as a constraint on the insurer’s exercise of remedies. It is regularly cited in contribution disputes between insurers, in coverage litigation where the insurer relies on pre-contractual non-disclosure, and in motor and household insurance cases involving allegedly innocent misrepresentation.
For consumer and very small business insurance, the duty of disclosure is now governed by the Consumer Insurance (Disclosure and Representations) Act 2012, which abolishes the duty of disclosure in favour of a duty to take reasonable care not to make a misrepresentation. The reasoning of Drake v Provident on inducement nonetheless continues to inform the question whether a misrepresentation has been a qualifying one entitling the insurer to a remedy under the 2012 Act.
For non-consumer business, the Pan Atlantic test as refined by Drake v Provident has been substantially codified in sections 7 and 8 of the Insurance Act 2015. For brokers the case is a reminder that, in negotiating coverage disputes, the underwriting file is often the decisive battleground on the inducement issue.
By Apex Insurance Brokers on 2026-06-06. Next review: 2026-12-06.
This entry is part of the Apex Insurance Wiki. Last reviewed by Apex Insurance Brokers on 2026-06-06. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
The judgment records the two-limb requirement drawn from Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd: the insurer must show both that the matter was material and that it actually induced the underwriter to write the risk on the terms agreed.
No. Materiality and inducement are separate requirements. If the evidence shows the underwriter would have accepted the risk on the same terms anyway, the inducement limb is not satisfied.
The Insurance Act 2015 replaced the old duty of disclosure with a duty of fair presentation and introduced proportionate remedies for non-consumer contracts within its scope. This judgment was decided under the earlier law, so it is best read as authority on the materiality and inducement analysis rather than on the current statutory remedies.
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