Utmost good faith — uberrimae fidei — is the historic principle that insurance contracts require complete honesty from both parties, with the insured under a heightened duty to disclose material facts to the insurer. For non-consumer commercial PI insurance taken out on or after 12 August 2016, the strict pre-Act doctrine has largely been superseded by the duty of fair presentation under the Insurance Act 2015. The label survives in market usage but the legal substance has changed.
What utmost good faith means in PI insurance
The doctrine has its origin in the eighteenth-century case of Carter v Boehm, where Lord Mansfield held that insurance contracts require special candour because the insurer can only assess the risk on what the proposer tells it. The Marine Insurance Act 1906 codified the position for marine insurance and (by judicial extension) for non-marine insurance: an insured had to disclose every material circumstance known or deemed to be known, and breach allowed the insurer to avoid the policy ab initio.
The pre-2016 position was harsh from the insured’s perspective. A non-disclosure that the insured did not realise was material, even an innocent or careless one, could entitle the insurer to walk away from the policy entirely. Premium might be returned but cover for any past or future claim was lost.
The Insurance Act 2015 introduced a more proportionate regime for non-consumer commercial insurance. The old duty of utmost good faith is now characterised as a principle of fair dealing rather than a free-standing remedy-giving rule. The substantive disclosure obligation is now the duty of fair presentation, with structured remedies depending on whether the insured’s failure was deliberate, reckless, negligent or innocent.
For PI insurance — almost all of which is commercial, non-consumer business — the practical question today is fair presentation, not utmost good faith in its strict historic sense. Brokers, lawyers and underwriters still use the phrase “utmost good faith” loosely as shorthand for the disclosure regime, which is why the term shows up in renewal correspondence and policy wordings. But the legal framework is now in the Act.
How the duty of fair presentation works in practice
The Insurance Act 2015 imposes a duty on a non-consumer insured to make a “fair presentation” of the risk before the contract is entered into. The duty has three elements.
Substance: disclose every material circumstance known or which ought to be known. A material circumstance is one that would influence the judgement of a prudent insurer in determining whether to accept the risk and at what terms. “Knowledge” of the insured firm includes the knowledge of senior management and those responsible for arranging insurance, plus what those people ought to know from a reasonable search of information available within the organisation.
Manner: present the information in a clear and accessible way. The insured cannot bury material facts in a 200-page proposal pack. The duty requires reasonably clear and accessible disclosure — the prudent underwriter must be able to find and understand the material facts without disproportionate effort.
Truth: representations of fact must be substantially correct, and representations of belief or expectation must be made in good faith. Statements of fact can be inaccurate in immaterial detail without breaching the duty; statements of forecast or opinion must be honestly held.
Remedies for breach are graduated. If the breach is deliberate or reckless, the insurer can avoid the policy from inception and keep the premium. If innocent or negligent, the insurer must apply the remedy the underwriter would have adopted had the truth been presented — proportionate reduction of claims payment if the underwriter would have charged a higher premium; rewriting the policy on different terms if those would have been the terms; or avoidance if the underwriter would not have written the risk at all. Premium adjustments may also apply.
Contracting out. Parties can contract out of certain Act provisions if the insurer takes specified steps to bring the change to the insured’s attention. Some PI wordings still attempt to apply pre-Act consequences for non-disclosure; whether they succeed depends on whether the transparency requirements have been met.
Worked example with realistic numbers
A management consultancy with £750,000 fee income takes out PI cover at £1m each and every claim with a £5,000 excess. At the renewal proposal in October, the directors complete the form. One director has been aware since July that a former client is preparing to make a substantial complaint about a strategy review the firm delivered fifteen months earlier. The director does not mention it because he is not certain whether the complaint will actually be made and the loss figure is unclear.
In March of the new policy year, the former client makes a formal claim alleging £620,000 of consequential loss. The PI insurer investigates and discovers the July awareness. The insurer takes a fair-presentation point: the awareness was a material circumstance known to a senior person at the firm at the time of renewal, and it was not disclosed.
Under the Insurance Act 2015, the insurer’s remedy depends on classification. If the non-disclosure is found to be deliberate or reckless (the director consciously chose not to mention something he knew was material), the insurer can avoid the policy from inception. If negligent (the director should have realised but did not), the remedy is proportionate — perhaps a 50% reduction in the claim payment if the insurer would have charged double the premium with the disclosure on the table. If innocent, a full payment may still be due if the underwriter would have written the risk on the same terms anyway.
In practice the insurer in this scenario will look at the contemporaneous evidence — emails, file notes, internal discussions — to characterise the director’s state of mind. If the director’s contemporaneous communications show he was actively concerned about a likely claim, the deliberate or reckless route is open to the insurer. If they show genuine ambiguity about whether anything would come of it, negligent or even innocent is more plausible. The outcomes are very different: avoidance vs. proportionate adjustment vs. full payment.
The lesson is to disclose. A circumstance disclosed at renewal is captured by the expiring policy under the claims-made trigger; a circumstance not disclosed risks any of the Act’s remedies depending on how the underwriter and ultimately a court characterise the breach.
When this matters most
The duty of fair presentation bites at every renewal and at every mid-term endorsement, but the moments at which the stakes are highest are:
Renewal sign-off. The proposal form is the formal vehicle for the duty. Signing without an internal canvass of partners and senior people about known or potential issues is a recipe for a fair-presentation dispute later. The “reasonable search” requirement means an absence of internal enquiry can itself be a breach.
Mid-term changes. Material changes during the policy year (new work types, large new clients, key personnel changes, structural reorganisations) often need to be notified and may engage the duty afresh. Some policy wordings impose specific notification duties on changes; the broader Insurance Act duty operates in the background.
At the point of a claim. When a claim is notified, insurers commonly review the underlying renewal disclosures. If the claim arose from a circumstance that the firm knew about and did not disclose at the relevant renewal, the insurer will examine the fair-presentation position. This is one of the most common reasons for a coverage decline.
On a structural change to the firm. Mergers, demergers, new partners, conversion of partnership to LLP — each is a moment at which the underwriter wants fresh information and the firm’s disclosure duties reset. Treating these as administrative changes rather than fresh underwriting exposures is a common error.
Common variations and market wording
“Each and every fact within the knowledge of any partner or director.” Some PI wordings restate the Act’s substance using broader words — capturing knowledge of any partner, not just those involved in arranging insurance. The Act’s “ought to be known” test reaches similar ground but the explicit wording can be more demanding.
“Continued duty of disclosure during the policy period.” A few PI policies impose a continuing duty of disclosure during the year, beyond the Insurance Act position which is essentially confined to formation of the contract (and renewal as a new contract). Continuing duties of this kind are contractual and need to be read.
“Subject to the Insurance Act 2015.” Some wordings expressly preserve the Act’s regime; others contract out of specific provisions. Read the policy declarations and the transparency clauses to understand which regime governs.
Pre-Act-style language. Some older PI wordings still use the phrase “utmost good faith” as if the strict pre-Act doctrine applied. Whether this survives in substance depends on whether the wording effectively contracts out of the Act’s reforms, which requires meeting the Act’s transparency standard. In modern PI placement this is increasingly rare but not unheard of.
Proposal-form warranties. A proposal form may convert specific statements into warranties as a matter of contractual structure. See our renewal warranties definition for how warranties interact with the fair-presentation framework.
Related concepts
The duty of fair presentation operates alongside PI renewal warranties and the practical mechanics of circumstance notification. For solicitors specifically, the SRA MTC overlays a non-avoidance protection that limits the insurer’s ability to use non-disclosure against an innocent claimant, even where the firm has materially breached its duty.
Frequently asked questions
Is utmost good faith still the law in UK PI insurance?
The principle of utmost good faith still exists but no longer carries the strict pre-Act remedy of automatic avoidance. For non-consumer commercial insurance — which covers almost all PI — the Insurance Act 2015 replaced the strict regime with the duty of fair presentation and graduated remedies. The phrase “utmost good faith” persists in market usage as shorthand for the disclosure framework, but the substance is now in the Act.
What is the duty of fair presentation?
The duty under the Insurance Act 2015 to disclose every material circumstance known or which ought to be known to the insured, in a manner that is reasonably clear and accessible to a prudent underwriter, with factual statements substantially correct and statements of opinion held in good faith. It replaces the pre-2016 strict duty of disclosure and applies to non-consumer commercial insurance taken out on or after 12 August 2016.
Who counts as “knowing” something at the firm?
Under the Act, the firm’s knowledge includes what is known to its senior management and to those responsible for arranging the insurance, plus what those people ought to know from a reasonable search of information available within the organisation. A firm cannot escape the duty by keeping the proposal-signer in the dark; a “reasonable search” of partners, key personnel and accessible records is part of the test.
What is a “material circumstance”?
A circumstance that would influence the judgement of a prudent insurer in deciding whether to accept the risk and at what terms. It does not require certainty about the outcome — a likely claim, a regulatory enquiry, a pattern of complaints, a substantial unresolved client query can all be material. If in doubt, disclose. The cost of over-disclosure is minor; the cost of non-disclosure can be loss of cover.
What happens if I don’t disclose something material?
The insurer’s remedy under the Insurance Act 2015 depends on classification. Deliberate or reckless breach can lead to avoidance of the policy from inception with the premium retained. Negligent or innocent breach engages proportionate remedies — what the underwriter would have done with the truth on the table, ranging from proportionate reduction of payment to revised terms to avoidance if the risk would have been declined entirely.
Does this affect solicitors’ PI under the SRA MTC?
The non-avoidance provision of the SRA Minimum Terms and Conditions limits the insurer’s ability to use non-disclosure to refuse a claim by an innocent claimant. The insurer must pay the claim and then pursue the firm for recoveries. So in solicitors’ PI the duty of fair presentation affects the firm-insurer relationship (premium adjustments, retro-active terms, recoveries) more than the claimant’s position. See SRA MTC.
Do I have a continuing duty during the policy year?
The Insurance Act duty is largely confined to formation of the contract — proposal and renewal — though some policy wordings impose continuing contractual duties of disclosure during the year. Material changes mid-year (new activities, key personnel changes, structural reorganisations) often need to be notified under specific policy conditions, and waiting until renewal can engage other remedies. Check the policy wording and notify changes promptly.
How do I evidence a proper fair presentation?
Document the internal canvass — emails to partners asking about known circumstances, file reviews carried out before renewal, supervision logs, broker correspondence about what was disclosed and how. The signed proposal form is the formal record but the evidence of the underlying search is what supports it if the disclosure is challenged. Many firms now hold a formal pre-renewal review meeting and minute the outcome.
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About Apex Insurance Brokers Ltd
Apex Insurance Brokers Ltd is a Bristol-based specialist insurance broker authorised and regulated by the Financial Conduct Authority under firm reference number 724952, and registered at Companies House under number 07014570. The firm advises professional services practices across England and Wales on Professional Indemnity, Cyber and related covers. Contact us at info@apexinsurancebrokers.co.uk or on 0117 325 0027.
Last reviewed: May 2026 by Apex Insurance Brokers Ltd.
Important: this article is general information, not advice on your specific circumstances. For advice on PI insurance for your firm, contact us on 0117 325 0027 or info@apexinsurancebrokers.co.uk.