Severability and non-imputation clauses explained
Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05
The problem these clauses solve
Most professional indemnity (PI) policies cover a firm and everyone in it — partners, directors, employees, consultants — under one contract. Two features of that contract create a hidden danger for honest people.
First, almost every PI wording contains a dishonesty or fraud exclusion. It removes cover for claims arising from an insured’s deliberate dishonesty, fraud or criminal act. Sensible in isolation — no insurer should fund a fraudster. But if that exclusion applied to the whole firm the moment one person was dishonest, every innocent colleague would lose their cover for the very claim the fraud triggered.
Second, the policy is bought on a presentation of risk. Under the Insurance Act 2015, a commercial firm must make a fair presentation when it buys or renews cover. If the person completing the proposal deliberately conceals a known problem, the insurer may have remedies against the policy — potentially avoiding it. Without protection, one dishonest signatory could unravel the contract for everyone.
Severability and non-imputation clauses exist to stop both outcomes from punishing the innocent.
Severability vs non-imputation: two jobs, one aim
The terms overlap and wordings use them loosely, but they address two distinct mechanics.
| Clause | What it does | When it bites |
|---|---|---|
| Severability of exclusions | Applies the dishonesty/fraud exclusion only to the individuals who took part in or condoned the conduct, not the whole firm. | A claim arises from one person’s fraud; innocent insureds keep their defence and indemnity. |
| Non-imputation (severability of the proposal) | Stops one insured’s misrepresentation or non-disclosure from being imputed to others, so the insurer cannot avoid the whole policy against the innocent. | At claim stage the insurer discovers the proposal was completed dishonestly by one individual. |
Read together, the two clauses deliver a simple promise: the honest are judged on their own conduct and knowledge, not on their colleague’s.
A worked example
Picture a four-partner surveying firm. One partner secretly falsifies valuations for a kickback. A lender sues the whole partnership for negligent and fraudulent valuations, and the fraud comes to light. What happens to cover?
- Without severability: the fraud exclusion could be read to strip indemnity from all four partners, and if the dishonest partner also lied on the proposal, the insurer might argue the policy should be avoided entirely. The three innocent partners face a large claim with no cover.
- With severability and non-imputation: the fraud exclusion applies only to the guilty partner. The three innocent partners retain indemnity and their defence costs, and the insurer cannot avoid the policy against them for the misrepresentation they neither made nor knew about.
The dishonest partner still loses their own cover — that is the point. Insurers protect the innocent, not the fraudster.
Not sure whether your PI wording protects innocent partners? We’ll check the clause before you sign, not after a claim.
Get a PI quote →Where you already see this protection
For some regulated professions, this cover is not optional — it is baked into mandatory minimum terms. The SRA Minimum Terms and Conditions for solicitors’ PI insurance, for example, restrict an insurer’s ability to avoid cover or refuse claims against a firm because of one person’s non-disclosure or misrepresentation. The scheme is deliberately built so that a rogue individual cannot leave a firm — or its clients — without protection.
Outside those compulsory schemes, whether you get this protection depends entirely on the wording your broker places. It is common in good PI and directors’ and officers’ (D&O) policies, but it is not universal, and the drafting varies.
What to check in your own wording
When we review a PI policy for a partnership, LLP or company, these are the points that decide whether an innocent insured is genuinely safe:
- Is the dishonesty exclusion severable? Look for wording that applies it only to those who committed or condoned the act.
- Is there a non-imputation clause covering the proposal? It should say one insured’s knowledge or misstatement is not imputed to others.
- Whose knowledge counts for the fair presentation? The Insurance Act 2015 defines who in a business is treated as knowing what. The clause should protect insureds who genuinely did not know.
- Are there carve-backs or claw-backs? Some wordings let the insurer recover from the guilty individual after paying the innocent — usually acceptable, but you should know it is there.
- Does the firm itself stay covered? A clause that protects individuals but not the entity can still leave the practice exposed. Check the definition of “insured”.
Illustrative limits — £1m, £2m or £5m — only matter if the innocent parties can actually access them. The severability wording is what turns a headline limit into real protection when things go wrong.
If you want a second opinion on how your current wording handles a dishonest colleague, start a quote and share your schedule and we’ll read the relevant clauses with you.
Common questions
Does a severability clause protect the dishonest partner too?
No. It protects the innocent insureds only. The person who committed the fraud or dishonesty loses cover for their own conduct — the clause draws a line between them and everyone else.
Is this the same as “innocent non-disclosure” cover?
Related but not identical. Innocent non-disclosure cover deals with honest mistakes in the presentation of risk. Non-imputation goes further — it stops one person’s deliberate misrepresentation from being blamed on colleagues who knew nothing about it.
Do sole traders need to worry about this?
Less so, because there are no innocent co-insureds to protect. The clauses matter most for partnerships, LLPs, companies and any firm where several people share one policy and could be tainted by another’s conduct.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.