An innocent non-disclosure clause protects a firm that genuinely and unintentionally fails to disclose a material fact when arranging its professional indemnity (PI) cover. It prevents the insurer from avoiding the policy where the non-disclosure was honest and not reckless.
A commercial policyholder owes a duty of fair presentation of the risk under the Insurance Act 2015 (sections 3 to 7). Before the Act, an innocent but material non-disclosure could entitle an insurer to avoid the policy entirely. The Act softened this by introducing proportionate remedies, but an innocent non-disclosure clause can go further still, expressly waiving the insurer's right to avoid in defined circumstances.
The wording generally states that the insurer will not avoid the policy, or reject a claim, on the grounds of non-disclosure or misrepresentation provided that:
Some wordings add that the insurer may instead adjust terms or premium to reflect what it would have charged had the fact been disclosed, mirroring the proportionate remedies in the Act rather than allowing outright avoidance.
The Act already distinguishes between deliberate or reckless breaches, where the insurer may avoid and keep the premium, and other breaches, where the remedy is proportionate. An innocent non-disclosure clause builds a firmer floor on top of this for honest mistakes, narrowing the insurer's ability to walk away. It does not protect deliberate concealment, which remains a route to avoidance and engages the dishonesty exclusion.
Proposal forms for PI cover are detailed and ask searching questions about turnover by activity, large contracts, claims history and known circumstances. An honest firm can still miss something, particularly where activities are diverse or where a circumstance was not obviously notifiable. The clause means an innocent slip does not hand the insurer a reason to decline a substantial claim.
It is not a substitute for careful disclosure. The safest course remains a thorough, well-documented fair presentation, with the clause as a backstop. Apex helps firms assemble a complete presentation and checks that the innocent non-disclosure wording, and its interaction with the Insurance Act 2015, is as protective as the market allows. For sector detail see the surveyors PI guide, the IFAs PI guide and the accountants PI guide.
The clause is most valuable when the firm can show its disclosure process was reasonable. Keeping the completed proposal, the underlying figures, board minutes recording the review and any broker correspondence creates a record that the presentation was made honestly and carefully. If a question of non-disclosure later arises, that evidence supports the "innocent and not reckless" test the clause requires. The clause protects honest mistakes; good documentation proves the mistake was honest.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.