CIDRA 2012

Category: Statutes and regulation · Reviewed by the Apex broking team · Last reviewed 2026-08-22 · ~5 min read

Consumer only — and why that is the point of the entry

Section 1 defines a consumer insurance contract as a contract of insurance between an individual who enters into it wholly or mainly for purposes unrelated to their trade, business or profession, and a person who carries on the business of insurance and becomes a party to the contract by way of that business. Everything in the Act runs off that definition.

If the contract is not a consumer insurance contract, CIDRA does not apply to it and the relevant regime is the Insurance Act 2015, whose duty of fair presentation in section 3 applies to non-consumer insurance contracts. The two statutes are not alternatives to be chosen between: the character of the insured decides which one governs. Sole traders and partnerships buying cover for their business are on the commercial side of the line; the same individual buying home or motor cover is on the consumer side. Mixed-purpose purchases turn on whether the contract is entered into wholly or mainly for purposes unrelated to the trade or business, which is a question of fact.

CIDRA came into force on 6 April 2013.

The duty: reasonable care not to misrepresent

Section 2(2) imposes on the consumer a duty to take reasonable care not to make a misrepresentation to the insurer. Section 2(4) is the important one: that duty replaces any duty relating to disclosure or representations by a consumer to an insurer which existed in the same circumstances before the Act applied. A consumer therefore has no free-standing obligation to volunteer information. The obligation is to answer the insurer’s questions carefully. Section 2(3) adds that a failure to comply with a request to confirm or amend particulars previously given is capable of being a misrepresentation.

Section 3 sets the standard. Whether reasonable care was taken is judged in the light of all the relevant circumstances, with examples including the type of contract and its target market, any explanatory material produced or authorised by the insurer, how clear and specific the insurer’s questions were, how clearly the insurer communicated the importance of answering questions at renewal or variation, and whether an agent was acting for the consumer. The standard is that of a reasonable consumer, but section 3(4) requires any particular characteristics or circumstances of the actual consumer of which the insurer was or ought to have been aware to be taken into account. Section 3(5) provides that a misrepresentation made dishonestly always shows a lack of reasonable care.

Qualifying misrepresentation

Section 4 sets the gateway to any remedy. The insurer has a remedy only if the consumer made the misrepresentation in breach of the section 2(2) duty and the insurer shows that without the misrepresentation it would not have entered into the contract or agreed the variation at all, or would have done so only on different terms. A misrepresentation meeting both limbs is a “qualifying misrepresentation”, and section 4(3) confirms that the only remedies available are those set out in Schedule 1. Carelessness alone, without inducement, gives the insurer nothing.

Careless versus deliberate or reckless

Section 5 classifies every qualifying misrepresentation as either deliberate or reckless, or careless. It is deliberate or reckless if the consumer knew that it was untrue or misleading, or did not care whether it was, and knew that the matter was relevant to the insurer, or did not care whether it was. Anything that is not deliberate or reckless is careless. Section 5(4) places the burden on the insurer to show that a misrepresentation was deliberate or reckless. Section 5(5) supplies two rebuttable presumptions in the insurer’s favour: that the consumer had the knowledge of a reasonable consumer, and that the consumer knew a matter about which the insurer asked a clear and specific question was relevant.

Schedule 1 remedies

For a deliberate or reckless qualifying misrepresentation, paragraph 2 allows the insurer to avoid the contract and refuse all claims, and it need not return any of the premiums paid except to the extent, if any, that it would be unfair to the consumer to retain them.

For a careless qualifying misrepresentation the remedies are proportionate and depend on what the insurer would have done had the duty been complied with. Under paragraph 5, if it would not have entered into the contract on any terms, it may avoid and refuse all claims but must return the premiums. Under paragraph 6, if it would have contracted on different terms other than as to premium, the contract is treated as if it had been entered into on those terms, if the insurer so requires. Under paragraph 7, if it would have charged a higher premium, it may reduce proportionately the amount payable on the claim, paragraph 8 defining the arithmetic. Paragraph 9 makes corresponding provision for the future of the contract where there is no outstanding claim, including a power for the insurer to terminate on reasonable notice, except where the contract is wholly or mainly one of life insurance.

Two further provisions worth knowing

Section 6 abolishes the basis of contract clause in consumer insurance: a representation made by a consumer in connection with a proposed contract or variation is not capable of being converted into a warranty, whether by declaring it to form the basis of the contract or otherwise. The non-consumer equivalent arrived four years later as section 9 of the Insurance Act 2015.

Section 10 prevents contracting out. A term of a consumer insurance contract, or of any other contract, which would put the consumer in a worse position as respects pre-contract disclosure and representations, or as respects the remedies for qualifying misrepresentations, is to that extent of no effect. The section does not apply to a contract settling a claim.

Frequently asked questions

Does CIDRA apply to my business insurance?

No. CIDRA applies only to consumer insurance contracts, meaning cover taken out by an individual wholly or mainly for purposes unrelated to their trade, business or profession. Business cover is governed by the Insurance Act 2015 and its duty of fair presentation.

Do consumers still have to disclose everything material?

No. Section 2(4) replaced the old duty of disclosure with a duty to take reasonable care not to make a misrepresentation. The consumer must answer the insurer's questions carefully rather than volunteer information unprompted.

What can an insurer do about an innocent mistake?

If the misrepresentation was not careless at all, or if it did not induce the contract, there is no qualifying misrepresentation and no remedy. If it was careless and induced the contract, the remedies in Schedule 1 are proportionate rather than automatic avoidance.

Who has to prove that a misrepresentation was deliberate?

The insurer. Section 5(4) puts the burden on it, subject to the presumptions in section 5(5) about the consumer's knowledge.

Related entries

• Consumer Insurance (Disclosure and Representations) Act 2012
• Fair presentation of the risk
• Material misrepresentation
• Utmost good faith
• Contracting out
• Commercial insurance UK

This entry is part of the Apex Insurance Wiki. It states the position as at August 2026. Last reviewed 2026-08-22. Next review: 2027-02-22. It is general insurance information, not legal advice, and it is not regulated advice on a specific policy.

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.