Section 9 of the Insurance Act 2015 is the gateway provision: where a non-consumer policyholder commits a qualifying breach of the duty of fair presentation, the insurer's remedies are no longer pre-Act all-or-nothing avoidance. Instead, the remedies are those set out in Schedule 1 to the Act. Schedule 1 sets out a ladder of three calibrated outcomes depending on what the insurer would have done had the breach not occurred.
The shift matters. Before the Act came into force in August 2016, an innocent or careless non-disclosure on a commercial policy could allow the insurer to avoid the contract and refuse the claim in full. Schedule 1 ends that result for innocent and careless breaches. Avoidance is reserved for the narrow category of cases where the insurer would not have written the risk at all.
The proportionate-remedy ladder in Schedule 1 only applies to a qualifying breach that is neither deliberate nor reckless. Section 8(5) draws that line. If the breach is deliberate or reckless, Schedule 1 Part 1 paragraphs 2 to 4 apply: the insurer may avoid the contract, refuse all claims, and retain the premium. There is no proportionate calculation. For how a breach becomes qualifying, see section 8 qualifying breaches. The underlying duty sits in section 3 fair presentation.
For innocent and careless breaches, Schedule 1 Part 1 paragraphs 5 to 8 govern.
Schedule 1 paragraph 5: the insurer may avoid the contract and refuse all claims, but must return the premium. This is the only route to avoidance for a non-deliberate, non-reckless breach, and it requires evidence that no reasonable insurer would have written the risk on any terms.
Schedule 1 paragraph 7: the contract is treated as if it had included those different terms from the start. The common example is an exclusion that would have been imposed had the relevant fact been disclosed. The claim is then assessed against the policy as it would have been written.
Schedule 1 paragraph 6: the claim is reduced proportionately. The reduction is calculated by reference to the ratio of the premium actually charged to the premium that would have been charged. This is the calibrated remedy that matters most often in practice.
The arithmetic is premium charged divided by premium that would have been charged. That ratio is applied to the claim.
A surveyor firm renewing its professional indemnity policy fails to disclose a £200,000 claim notified to the previous insurer within the last five years. The breach is careless rather than deliberate or reckless. The insurer establishes that, with the claim history disclosed, it would still have written the cover but would have charged £18,000 in premium instead of the £14,000 actually charged. A subsequent loss of £500,000 is then notified.
Schedule 1 paragraph 6 applies. The proportion is 14,000 divided by 18,000, which is 77.8%. The insurer's liability on the £500,000 claim is reduced to £388,889 (£500,000 multiplied by 0.778). The remaining £111,111 falls on the firm. The worked numbers are illustrative and do not reflect any actual policy or claim.
The pre-Act default was that an innocent or careless non-disclosure could void the policy outright. Under section 9 and Schedule 1, that result is now limited to cases where the insurer would not have written the risk on any terms. Most disclosure errors on professional indemnity policies — historical claims a partner forgot to mention, a regulatory matter that resolved without sanction, a change in fee income — sit in paragraph 6 or 7 territory, not paragraph 5. The policy continues to respond, but on adjusted terms or to a reduced amount.
That changes how a claim should be handled when an insurer raises a disclosure point at notification. The conversation moves from "is the policy void" to "what would the insurer have done differently, and what proportion or term applies". Evidence of underwriting practice becomes central. Apex documents the placement file in a way that preserves that evidence at inception, so it is available if a Schedule 1 question arises later.
For sector context, see the solicitors PI guide, the surveyors PI guide, the architects PI guide and the accountants PI guide.
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.