Section 9 of the Insurance Act 2015 removed one of the harshest traps in older insurance contracts: the basis-of-contract clause. Understanding what it changed helps professional firms read a modern PI proposal with the right expectations.
Before the Act it was common for a proposal form to state that the answers given formed the basis of the contract. The effect was to convert every answer into a warranty, so that a single inaccurate reply — however trivial or immaterial — could entitle the insurer to treat the whole policy as discharged. The insured often had no idea the clause carried that consequence.
Section 9(2) provides that a representation made in connection with a proposed non-consumer insurance contract is not capable of being converted into a warranty by any provision of the contract, the proposal, or any other document. Basis-of-contract clauses are, in effect, of no legal effect. A pre-contract statement remains a representation, governed by the duty of fair presentation and its proportionate remedies, and cannot be dressed up as a promissory warranty.
The distinction matters because the two are policed very differently:
Section 9 makes sure a firm's answers on a proposal cannot be silently reclassified from the first category into the second.
Section 9 does not abolish genuine warranties that an insurer chooses to write into the policy — for example a warranty that the firm operates a documented file-review procedure. Those remain enforceable, subject to section 10. What it stops is the wholesale conversion of proposal answers into warranties by a boilerplate clause. Engineering practices, architects and solicitors reading a PI schedule should still identify any express warranties and make sure the firm can actually comply with them. Apex reviews policy wordings to flag express warranties and explain what compliance requires.
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.