Insurance Act 2015 fair presentation: deep dive

Category: Placing and disclosure · Reviewed by the Apex broking team · Last reviewed 2026-08-21 · ~7 min read

Why the Act was passed

Before 2016 the disclosure duty in business insurance rested on the Marine Insurance Act 1906 and the case law built on it. The insured owed a duty of utmost good faith and had to disclose every material circumstance; the sole remedy for breach was avoidance of the contract from inception, whatever the insured’s state of mind and however marginal the undisclosed fact. That all-or-nothing structure was criticised for decades. The Insurance Act 2015, in force for contracts and variations entered into on or after 12 August 2016, replaced it for non-consumer insurance with a restated duty and a graduated set of remedies. Section 14 removed the right to avoid a contract simply for breach of the duty of utmost good faith, and section 21 disapplied the corresponding provisions of the 1906 Act.

Section 3: the anatomy of a fair presentation

Section 3(1) requires the insured to make a fair presentation of the risk before the contract is entered into. Section 3(3) breaks that into three limbs.

• Disclosure. Either disclosure of every material circumstance the insured knows or ought to know, or — failing that — disclosure that gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing those material circumstances. The second limb is a genuine alternative and is how the Act accommodates signposting rather than exhaustive listing.
• Manner. The disclosure must be made in a manner that would be reasonably clear and accessible to a prudent insurer. This limb has no direct predecessor in the old law. Burying an unusual feature of the risk in an appendix, or handing over a large undifferentiated bundle of documents, does not discharge the duty.
• Accuracy. Every material representation as to a matter of fact must be substantially correct, and every material representation as to a matter of expectation or belief must be made in good faith. Section 3(5) defines “substantially correct” as meaning a prudent insurer would not consider the difference between what is represented and what is actually correct to be material.

Section 3(4) confirms that the required disclosure is of material circumstances, which under section 7(3) includes special or unusual facts relating to the risk, any particular concerns which led the insured to seek insurance, and anything which those concerned with the class of insurance and the field of activity in question would generally understand as something to be dealt with in a fair presentation.

Section 4: the insured’s knowledge and the reasonable search

An individual insured knows what is known to the individual and to those who arrange their insurance. A corporate insured knows what is known to its senior management — defined in section 4(8) as those individuals who play significant roles in the making of decisions about how the insured’s activities are to be managed or organised — and to those responsible for the insured’s insurance, which expressly includes the broker.

Beyond actual knowledge, section 4(6) fixes the insured with what it ought to know, meaning what should reasonably have been revealed by a reasonable search of the information available to it. The information may be held within the organisation or by someone else, such as a group company, an outsourced function, a coverholder or an agent. The Act does not prescribe the search. What is reasonable depends on the size and structure of the business, the class of insurance and the time available, and the practical answer is to design a search that can be described and evidenced afterwards: who was asked, what they were asked, when, and what came back.

Section 6(1) adds that an individual is treated as knowing something that is common knowledge, and things a person in their role would reasonably be expected to know in the ordinary course of their role. Section 6(2) preserves blind-eye knowledge: a person knows something if they suspect it and deliberately refrain from confirming it.

Section 5: what the insurer is taken to know

The duty is not one-sided. Section 3(5)(b) and section 5 mean the insured need not disclose circumstances that the insurer knows, ought to know, or is presumed to know. The insurer knows what is known to the individuals participating in the decision to take the risk. It ought to know matters held by its own employees or agents which are readily available to the underwriter. It is presumed to know things which are common knowledge and things an insurer writing that class of business in that field would reasonably be expected to know. General industry conditions, publicly reported events and the ordinary hazards of a trade therefore sit on the insurer’s side of the line.

Section 8: qualifying breach and inducement

A breach of the duty gives the insurer no remedy unless it is a qualifying breach. Under section 8(1) that means the insurer shows that, but for the breach, it would not have entered into the contract at all, or would have done so only on different terms. That is the statutory form of the inducement requirement, and it must be proved by reference to the actual insurer’s underwriting, not a hypothetical one. Underwriting files, referral rules and rating evidence are what decide the point in practice. Section 8(4) then classifies the qualifying breach as either deliberate or reckless, or neither.

Schedule 1: the proportionate remedies

Schedule 1 sets out what the insurer may do.

• Deliberate or reckless breach. The insurer may avoid the contract, refuse all claims, and need not return any of the premium. The burden of showing that the breach was deliberate or reckless is on the insurer.
• Neither deliberate nor reckless — insurer would not have written the risk. The insurer may avoid the contract and refuse all claims, but must return the premium.
• Neither deliberate nor reckless — insurer would have written on different terms. The contract is treated as if it had been entered into on those different terms, if the insurer requires. Where the different term is an exclusion, the claim may fall outside cover altogether.
• Neither deliberate nor reckless — insurer would have charged a higher premium. The insurer may reduce proportionately the amount to be paid on a claim. The reduction is the ratio of the premium actually charged to the premium that would have been charged. As an arithmetic illustration, if the premium charged was half of what would have been charged, the insurer pays half the claim.

Where the qualifying breach relates to a variation rather than to the original contract, Schedule 1 applies a parallel set of remedies keyed to the variation and to any change in premium.

Sections 16 and 17: contracting out

The Act is a default regime for business insurance. Section 16 allows an insurer and a non-consumer insured to agree a term putting the insured in a worse position in relation to Part 2, but only if the transparency requirements in section 17 are met: the insurer must take sufficient steps to draw the disadvantageous term to the insured’s attention before the contract is entered into, and the term must be clear and unambiguous as to its effect. What is sufficient depends on the characteristics of the insured and the circumstances of the transaction. Clauses that reinstate avoidance as the remedy for any non-disclosure, or that convert statements into warranties, are the typical examples and should be identified at placing rather than discovered at claim stage. By contrast, section 16A prevents contracting out of the section 13A implied term about timely payment where the breach is deliberate or reckless.

Interaction with warranties and other terms

Part 3 changed the neighbouring rules. Section 9 abolished “basis of the contract” clauses, which used to convert every answer on a proposal form into a warranty. Section 10 replaced the old rule that breach of warranty discharged the insurer from all liability with a suspensory regime: liability is suspended while the breach continues and revives once it is remedied. Section 11 provides that where a term is designed to reduce the risk of loss of a particular kind, at a particular location or at a particular time, the insurer cannot rely on non-compliance if the insured shows the non-compliance could not have increased the risk of the loss that actually occurred. These provisions are frequently in play alongside a fair presentation argument.

Practical implications for a commercial buyer

The Act rewards process. A defensible presentation usually involves a documented reasonable search across the business, a written record of who was asked and what they said, a structured submission that flags unusual features rather than burying them, and a renewal review of what has changed since last year — new activities, new contracts, new jurisdictions, claims and circumstances, changes in senior management. Where a fact is arguably immaterial, disclosing it costs little; failing to disclose it can cost a proportionate reduction of every claim in the year. Where the presentation is complex, agreeing the scope of the reasonable search with the broker before it starts is a sensible step.

Reading this alongside the short entry

A one-paragraph definition of the duty and the headline remedies is in the shorter entry on fair presentation. This page is the fuller treatment; the two are separate entries and each is canonical to itself.

Frequently asked questions

When did the duty of fair presentation take effect?

The Insurance Act 2015 applies to non-consumer insurance contracts and variations entered into on or after 12 August 2016. Contracts placed before that date remain governed by the previous law.

What is a reasonable search under section 4?

The Act does not define it. It is the search a business of that size and type could reasonably be expected to carry out across information available to it, including information held by group companies and agents. The important thing is that it can be described and evidenced later.

Can an insurer still avoid a policy for non-disclosure?

Only where the qualifying breach was deliberate or reckless, or where the insurer proves it would not have written the risk at all - in which case it must return the premium. Otherwise the remedy is a change of terms or a proportionate reduction of the claim.

Can insurers contract out of the Act?

In non-consumer insurance, yes, but only if the transparency requirements of section 17 are satisfied: the disadvantageous term must be drawn to the insured's attention before inception and be clear and unambiguous.

Related entries

• Fair presentation
• Material circumstance
• Bad faith claim
• Notification of claim
• Professional indemnity insurance

This entry is part of the Apex Insurance Wiki. Last reviewed 2026-08-21. Next review: 2027-02-21. It is general reference information about UK insurance law and market practice, 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.