Insurance Act 2015 and professional indemnity: case law deep dives
How to use this index
The Insurance Act 2015 rewrote the pre-contract duty for business insurance, restructured the law of warranties, created a remedy for late payment and abolished avoidance for breach of the duty of utmost good faith. Much of the older case law survives — on materiality, on inducement, on what a fraudulent claim is — but it now has to be read through the Act. The groupings below pair the statutory entries with the decisions that give them content. The Act itself is on legislation.gov.uk.
Fair presentation of the risk: sections 3 and 7
Section 3 replaced the old duty of disclosure with a duty of fair presentation. Section 7 supplies the machinery: a circumstance or representation is material if it would influence the judgement of a prudent insurer in deciding whether to take the risk and on what terms, and the section gives examples of what may be material — special or unusual facts, particular concerns that led the insured to seek cover, and anything that those concerned with the class of insurance would generally understand to need disclosing.
Fair presentation of the risk — What section 3 requires, and how it differs from the pre-2015 duty of disclosure.
Material circumstance — The section 7 test, with the statutory examples.
Material misrepresentation — Representations of fact and of expectation or belief, and when a representation is substantially correct.
Reasonable search — What an insured must do to find out what it ought to know before presenting the risk.
Pan Atlantic v Pine Top — Materiality and inducement: the decision that separated the two questions and required actual inducement.
Inducement — Why materiality alone is not enough for the insurer to have a remedy.
Young v Royal & Sun Alliance — An early judicial treatment of fair presentation and the reasonable search under the Act.
Berkshire Assets v AXA — Non-disclosure of a matter affecting the moral hazard of the insured.
North Star Shipping v Sphere Drake — Non-disclosure, materiality and inducement in the pre-Act framework.
Mutual Energy v Starr Underwriting — Presentation of the risk and the construction of policy terms around it.
HIH Casualty v Chase Manhattan — Non-disclosure, waiver and the limits of contracting out of the consequences of fraud.
Decorum Investments v Atkin (The Elena G) — Disclosure and the treatment of an insured’s history.
Argo Systems v Liberty — Affirmation and waiver of the right to avoid.
Drake Insurance v Provident — Good faith constraints on the exercise of an insurer’s right to avoid.
Warranties and terms: sections 9, 10 and 11
The Act abolished basis of contract clauses, converted breach of warranty from a discharge of liability into a suspension of it, and stopped insurers relying on breach of a term that could not have increased the risk of the loss that actually happened.
Basis of contract clauses abolished — Section 9 and why pre-contract statements can no longer be converted into warranties.
Warranties reform — What sections 10 and 11 changed, in PI terms.
From warranty to suspensive condition — How section 10 changed the effect of breach.
Section 11 — Terms not relevant to the actual loss, and how the section is applied.
Warranty, condition precedent and representation — Telling the three apart on a PI wording.
Hussain v Brown — Whether a statement is a continuing warranty or a statement about the present.
AC Ward & Son v Catlin — Construction of protective conditions and conditions precedent.
Toomey v Eagle Star (No 2) — Construction of the contract wording in a reinsurance dispute.
MDIS v Swinbank — Notification wording and the consequences of getting it wrong.
Fraudulent claims: section 12
Section 12 sets out the insurer’s remedies where the insured makes a fraudulent claim, and section 13 deals with the position of other parties to a group policy.
Section 12 — The statutory remedies for a fraudulent claim.
Versloot Dredging v HDI-Gerling — Collateral lies and fraudulent devices: the Supreme Court’s treatment of a lie told in support of a genuine claim.
Suez Fortune Investments v Talbot Underwriting (The Brillante Virtuoso) — Fraud on the claim, and the consequences.
Glencore v Freeport — Cargo loss, theft and fraud allegations.
Fraud and dishonesty exclusions in PI — How PI wordings handle dishonesty by a partner or employee.
The innocent partner position — Why the minimum terms for solicitors treat dishonesty differently.
Good faith after section 14
This is the area where published material most often lags the law. Section 14 abolished any rule of law permitting a party to avoid a contract of insurance on the ground that utmost good faith has not been observed by the other party, and modified the rule that insurance is a contract of the utmost good faith to the extent required by the Act and by the Consumer Insurance (Disclosure and Representations) Act 2012. Section 17 of the Marine Insurance Act 1906 was amended to match. Utmost good faith survives as an interpretative principle; avoidance as a freestanding remedy for breach of it does not.
Utmost good faith — What section 14 removed, what remains, and why so much online material is out of date.
Section 14 — The statutory provision in detail.
Marine Insurance Act 1906 — The framework the 2015 Act amended.
Consumer Insurance (Disclosure and Representations) Act 2012 — The consumer regime that sits alongside the 2015 Act.
Late payment of claims: section 13A
Section 13A, inserted by the Enterprise Act 2016, implies a term that the insurer must pay sums due within a reasonable time, and gives the insured a damages remedy for breach.
Section 13A — The implied term and the remedy.
The claims-handling duty — How the obligation operates in practice.
Payment within a reasonable time in PI claims — What the duty means where liability is genuinely in dispute.
What counts as a reasonable time — The factors that bear on the assessment.
Reasonable grounds to dispute — The defence available to an insurer that had proper grounds.
Damages for late payment — What can be recovered, and the limits.
Late payment damages — Short reference entry.
Enterprise Act 2016 amendments — How section 13A came to be inserted.
Aggregation: where PI limits are won and lost
Aggregation is not an Insurance Act question, but it decides how much cover is actually available once claims start arriving, so it belongs in any PI case law index.
AIG Europe v Woodman — The Supreme Court on “a series of related matters or transactions”.
Spire Healthcare v RSA — Aggregation of claims arising from one source or original cause.
Caudle v Sharp — The “originating cause” wording and the unifying factor.
Standard Life v Oak Dedicated — Construction of a mitigation costs clause and the reach of the insuring clause.
Underlying cause aggregation clauses — How the wording variants behave.
Aggregation under the SRA minimum terms — Conveyancing transactions and the series question.
Aggregation in accountancy PII — How the ICAEW arrangements handle it.
Notification and the claims-made trigger
Kajima v Underwriting Members of Lloyd’s — What a valid notification of circumstances has to contain.
Friends Provident v Sirius — Conditions precedent and the consequences of late notification.
Bowmer & Kirkland v Underwriters at Lloyd’s — Notification under a construction professional indemnity programme.
Beazley Underwriting v Travelers — Notified circumstances and which policy year responds.
Notifying a circumstance — What to notify and when.
Notification versus claim — Why the distinction changes which policy responds.
Preserving privilege on notification — Practical handling.
Scope of duty, standard of care and loss
Manchester Building Society v Grant Thornton — The Supreme Court’s restatement of scope of duty and the purpose of the advice.
Steel v NRAM — Assumption of responsibility and reliance between professionals.
Caparo v Dickman — The framework for a duty of care to third parties.
Henderson v Merrett Syndicates — Concurrent duties in contract and tort.
URS Corporation v BDW Trading — Building safety, retrospective liability and the reach of a claim in negligence.
Martlet Homes v Mulalley — Cladding, causation and the measure of remedial loss.
CIS General Insurance v IBM — Contractual exclusion of loss on a failed technology programme.
Dreamvar v Mishcon de Reya — Identity fraud, breach of trust and where the loss falls.
P&P Property v Owen White & Catlin — The companion appeal on the same conveyancing fraud issue.
Countrywide Assured v Marshall — Regulatory redress and the response of a PI programme.
Key professional negligence cases 2020–2026 — A running summary of recent decisions.
Frequently asked questions
Did the Insurance Act 2015 abolish utmost good faith?
It abolished the remedy, not the concept. Section 14 removed any rule of law permitting a party to avoid a contract of insurance on the ground that utmost good faith was not observed, and modified the rule that insurance is a contract of the utmost good faith to the extent the Act and the Consumer Insurance (Disclosure and Representations) Act 2012 require. Section 17 of the Marine Insurance Act 1906 was amended accordingly. A great deal of published material still describes avoidance for breach of utmost good faith as if it survived; it does not.
What makes a circumstance material under the Act?
Section 7(3) provides that a circumstance or representation is material if it would influence the judgement of a prudent insurer in determining whether to take the risk and, if so, on what terms. Section 7(4) gives examples: special or unusual facts relating to the risk, any particular concerns that led the insured to seek cover, and anything that those concerned with the relevant class of insurance would generally understand should be dealt with in a fair presentation.
Is pre-2015 case law still useful?
Yes, with care. Decisions on what is material, on inducement and on what constitutes a fraudulent claim continue to inform the analysis. Decisions about the remedy for non-disclosure, about basis of contract clauses and about breach of warranty discharging the insurer’s liability have been overtaken by the Act and need to be read as history rather than as current law.
Why does this index cover aggregation as well as the Act?
Because in professional indemnity the practical question after “is it covered?” is almost always “how much is available?”, and that is an aggregation question. A firm can be entirely within cover and still be uninsured for most of its loss if a series of related claims collapses into a single limit.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.