What is the duty of fair presentation of risk under the Insurance Act 2015?

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-05

If you buy professional indemnity or any other commercial insurance in the UK, the duty of fair presentation is the single most important obligation you have before cover begins. It governs what you must tell your insurer about your business and your risks. Getting it right protects your claims; getting it wrong can leave you with reduced cover, or none at all, precisely when you need to rely on the policy.

Where the duty comes from

The duty of fair presentation is set out in section 3 of the Insurance Act 2015. The Act received Royal Assent in 2015 and came into force on 12 August 2016. It applies to non-consumer insurance contracts — that is, contracts taken out wholly or mainly for purposes related to a trade, business or profession.

Before the Act, commercial insurance was governed largely by the older duty of disclosure under the Marine Insurance Act 1906 and the doctrine of "utmost good faith". That regime was widely seen as harsh: an innocent, immaterial-looking omission could allow an insurer to avoid the whole policy. The Insurance Act 2015 replaced that with the more balanced framework of fair presentation and proportionate remedies. Consumer policies are governed separately, by the Consumer Insurance (Disclosure and Representations) Act 2012.

What a "fair presentation" actually requires

Under section 3, a fair presentation of the risk has three components. You must:

• Disclose every material circumstance you know or ought to know — or, failing that, give the insurer enough information to put a prudent insurer on notice that it needs to make further enquiries to reveal those material circumstances.
• Make the disclosure in a reasonably clear and accessible manner to a prudent insurer. Burying a critical fact in a mass of undigested material — a so-called "data dump" — does not count as fair presentation.
• Ensure every material representation of fact is substantially correct, and every material representation as to a matter of expectation or belief is made in good faith.

The duty is reciprocal in spirit: it rewards a genuine, structured disclosure and no longer expects you to guess at every conceivable fact an underwriter might one day wish you had mentioned.

What counts as a "material circumstance"?

Section 7 of the Act defines this. A circumstance is material if it would influence the judgement of a prudent insurer in deciding whether to take on the risk and, if so, on what terms. Examples of things that are commonly material for a professional indemnity risk include:

• Past claims and circumstances that could reasonably give rise to a future claim, even if no claim has yet been made;
• The nature and mix of the professional services you provide, including any high-risk or overseas work;
• Any known disputes, complaints, or regulatory investigations;
• Significant changes to your business — mergers, new activities, or major contracts;
• The identity and history of the principals and key staff.

The Act also lists things that need not be disclosed unless the insurer asks, such as circumstances that diminish the risk, matters the insurer already knows or ought to know, and matters the insurer waives.

Not sure what your insurer will treat as material? Talk it through with Apex before you complete a proposal →

"Know or ought to know" — whose knowledge counts?

Section 4 explains what your business is treated as knowing. For an organisation, this covers what is known to senior management and to those responsible for arranging the insurance (including your broker). It also includes what you ought to know — what a reasonable search of information available to you would reveal, whether held within your business or by others, such as agents holding relevant information.

This "reasonable search" standard matters. You cannot deliberately compartmentalise information to avoid disclosing it. Equally, the Act recognises you cannot be expected to know everything held by every individual across a large organisation. Section 5 addresses the insurer's own knowledge, so a fact the insurer already knows, ought to know, or is presumed to know does not need to be disclosed.

Consequences of breach: the proportionate remedies

If you fail to make a fair presentation, the insurer's remedies depend on the nature of the breach. This is the Act's most significant reform, set out in section 8 and Schedule 1. The remedy hinges on whether the breach was deliberate or reckless, and on what the insurer would have done had a fair presentation been made.

Deliberate or reckless breach

If the insurer shows the breach was deliberate or reckless, it may avoid the contract, refuse all claims, and keep the premiums paid. This is the most severe outcome and is reserved for the most serious conduct.

Neither deliberate nor reckless

Where the breach is innocent or careless (not deliberate or reckless), the remedy is proportionate and depends on what the insurer would have done with a fair presentation:

• Would not have entered the contract at all: the insurer may avoid the policy and refuse claims, but must return the premium.
• Would have entered on different terms: the contract is treated as if it had included those terms from the outset.
• Would have charged a higher premium: the insurer may reduce the claim proportionately — paying only the proportion the actual premium bears to the premium it would have charged.

So a business that innocently under-declares and would have paid, say, a premium 20% higher, would typically see a claim settlement reduced accordingly, rather than losing cover altogether. That proportionate approach is a marked improvement on the old "all or nothing" position.

Old law vs the Insurance Act 2015

The practical difference between the two regimes is stark:

Can insurers contract out of the Act?

For non-consumer contracts, the Act allows parties to agree different terms — a "disadvantageous term" that puts the insured in a worse position than the Act's default. But under Part 5 (sections 16 and 17), any such term is only effective if the insurer meets transparency requirements: it must take sufficient steps to draw the term to your attention before the contract is entered into, and the term must be clear and unambiguous as to its effect. This is one reason it pays to have a broker review policy wordings rather than accept them at face value.

Practical steps to make a fair presentation

• Carry out a reasonable, documented search across your business for material information before renewal.
• Involve senior management and anyone with relevant knowledge in the proposal process.
• Answer proposal questions fully and present information in a clear, structured way — not a bundle of unsorted attachments.
• Disclose known claims and circumstances that could become claims, even if you think they will come to nothing.
• Keep a record of what you disclosed and when.

Common questions

Does the duty of fair presentation apply to renewals?

Yes. A renewal is a new contract of insurance, so the duty applies afresh each time you renew, as well as at inception and often when you make a mid-term variation.

What is the difference between a deliberate breach and a careless one?

A breach is deliberate or reckless if the insured knew it was in breach of the duty, or did not care whether it was. Anything falling short of that — an honest mistake or careless omission — is treated as neither deliberate nor reckless, which triggers the proportionate remedies rather than outright avoidance. The insurer bears the burden of proving a deliberate or reckless breach.

Does using a broker satisfy the duty for me?

A broker helps you present the risk well and knows what insurers treat as material, but the duty remains yours. Importantly, your broker's knowledge can be attributed to you under section 4, so it is essential to give your broker complete and accurate information.

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 reading your policy wording.