Section 10 of the Insurance Act 2015 rewrote the consequences of breaching an insurance warranty. The change is significant for any professional firm whose PI policy contains express warranties or procedural conditions.
Under section 33(3) of the Marine Insurance Act 1906, and the common law that followed it, breach of a warranty automatically discharged the insurer from all liability from the moment of breach — even if the breach was later remedied, and even if it had nothing to do with any eventual loss. The insurer's liability simply ended, permanently.
Section 10(1) abolishes that rule. Section 10(2) replaces it with a suspensory remedy: the insurer has no liability for loss occurring, or attributable to something happening, after a warranty is breached but before the breach is remedied. Once the breach is remedied under section 10(5), cover is restored for losses occurring afterwards. In short, breach now switches cover off temporarily rather than ending it for good.
Section 10(5) and 10(6) explain remedy. Where a warranty requires something to be done by a particular time, it is remedied if the risk later becomes essentially the same as the insurer originally contemplated. Where it requires a continuing state of affairs, it is remedied when the insured stops being in breach. The insurer remains off risk only for the window during which the breach subsisted.
Suppose a PI policy warrants that a firm carries out a documented independent review of all reports before issue, and for a period that review lapses. Under the old law a loss arising years later, entirely unconnected to the lapse, could be refused outright. Under section 10 the insurer is only off risk for losses occurring during the period the review was not being done; once the firm reinstates the procedure, cover resumes.
Section 10 does not stand alone. Section 11 provides that where a term — including a warranty — tends to reduce the risk of a particular kind of loss, the insurer cannot rely on non-compliance if the insured shows the breach could not have increased the risk of the loss that actually happened. The two provisions together substantially soften the old warranty regime.
For architects, engineers and quantity surveyors whose policies often contain procedural warranties about checking and supervision, the lesson is to identify each warranty, comply continuously, and remedy any lapse promptly. Apex reviews wordings so firms know exactly which terms are warranties and what compliance looks like day to day.
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.