Warranty vs condition in an insurance policy: what the difference actually means

Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05

The words “warranty” and “condition” get used loosely in conversation, but in an insurance contract they are terms of art with very different consequences. Which label attaches to a clause — and how the courts read it — can decide whether a claim is paid in full, reduced, or declined. This guide sets out the distinction and how the Insurance Act 2015 reshaped it for UK business policies.

What a warranty is

A warranty is a fundamental term of the contract: a promise by the insured that something is true, or that they will do (or not do) something. Common examples are a warranty that a fire alarm is maintained and functioning, that a vehicle is kept in a locked compound overnight, or that stock is stored a set height off the floor.

Warranties must be complied with exactly, not merely substantially. Historically, under section 33 of the Marine Insurance Act 1906 and the wider common law, any breach of warranty automatically discharged the insurer from liability from the moment of breach — even if the breach had nothing to do with the loss and was later put right. That harsh rule is what the Insurance Act 2015 set out to fix.

What a condition is

“Condition” is a broader label, and its effect depends on the kind of condition. Policies typically contain three sorts:

• Conditions precedent to liability — obligations that must be met before the insurer has to pay a claim, such as notifying a claim within a stated period. Breach can entitle the insurer to reject that particular claim.
• Conditions precedent to the contract — matters that must be satisfied before cover incepts at all.
• Bare (or mere) conditions — general obligations that carry no automatic loss of cover. Breach usually gives the insurer only a claim in damages for any loss the breach actually caused, which in practice is often nil.

The critical point is that a clause's label in the policy is not decisive. A term headed “condition” can operate as a warranty, and vice versa, depending on the words used and what the parties clearly intended.

How the Insurance Act 2015 changed warranties

The Insurance Act 2015 applies to insurance contracts entered into or varied on or after 12 August 2016. It made three changes that matter here.

1. Warranties are now suspensory, not fatal. Under section 10, breach of warranty no longer discharges the insurer's liability permanently. Instead, the insurer's liability is suspended for the period during which the insured is in breach. If the breach is remedied before any loss occurs, cover is restored and a later, unrelated claim must be paid. The insurer is only off-risk for losses that happen while the breach subsists.

2. Terms irrelevant to the actual loss cannot be relied on. Under section 11, where a term (whether called a warranty or a condition) is designed to reduce the risk of a particular kind of loss, or loss at a particular location or time, the insurer cannot rely on the breach to avoid a claim if the insured shows that the non-compliance could not have increased the risk of the loss that actually happened. So a breach of a burglar-alarm warranty would not defeat a flood claim.

3. Basis of contract clauses are abolished. Under section 9, insurers can no longer use a “basis of the contract” clause to convert every answer on a proposal form into a warranty. This removed a longstanding trap where a trivial inaccuracy could destroy the whole policy.

Warranty vs condition at a glance

Can insurers contract out of the new rules?

For consumer policies, the Insurance Act 2015 protections cannot be watered down. For business (non-consumer) contracts, insurers can contract out of some provisions — for example, restoring a stricter warranty regime — but only if they meet the Act's transparency requirements: the disadvantageous term must be clear and unambiguous, and the insurer must take sufficient steps to draw it to the insured's attention before the contract is made. A term that fails those transparency tests cannot be enforced against the policyholder.

This is exactly why it pays to have someone check the small print. A broker can spot a warranty that has been reinstated by contracting out, flag an onerous condition precedent, and make sure you understand what you are promising before cover starts.

Why this matters in practice

Warranties and conditions are most often litigated after a large loss, when the insurer is looking for a reason to decline. Getting the basics right up front removes most of that risk: know which clauses are warranties, keep to them, document your compliance, and remedy any breach the moment you spot it. If your business relies on professional indemnity, property, or liability cover, an up-front review of your policy wording is time well spent.

Common questions

Does breaching a warranty still void my whole policy?
No. For contracts on or after 12 August 2016, section 10 of the Insurance Act 2015 makes warranties suspensory. Your cover is paused only while you are in breach. Once you put the breach right, cover revives and later unrelated claims should be paid.

Is a “condition” less serious than a “warranty”?
Not always. A bare condition carries mild consequences, but a condition precedent to liability can let an insurer reject a claim. And a clause labelled “condition” can legally operate as a warranty. The wording and intent matter more than the heading.

What was a basis of contract clause, and can insurers still use one?
It was a device that turned every answer on your proposal form into a warranty, so any inaccuracy could void the policy. Section 9 of the Insurance Act 2015 abolished these clauses, so they can no longer be used to do that.

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.