Section 11 of the Insurance Act 2015

Section 11 prevents an insurer from relying on non-compliance with a contractual term tending to reduce the risk of loss of a particular kind, at a particular location, or at a particular time, where the insured can show that the breach could not have increased the risk of the loss that actually occurred.

Definition §

Section 11 of the Insurance Act 2015 is a substantive protection for insureds against disproportionate denial of claims for breach of risk-management terms. Where a contractual term — whether described as a warranty, condition, exclusion or otherwise — is designed to reduce the risk of loss of a particular kind, in a particular location, or at a particular time, the insurer may not rely on non-compliance with that term to defeat a claim where the insured shows that the non-compliance could not have increased the risk of the loss which actually occurred in the circumstances in which it occurred.^[1]

The provision was a central recommendation of the Law Commission and the Scottish Law Commission. They identified a long-standing problem in commercial insurance practice: insurers frequently relied on technical breaches of risk-management terms to decline claims unconnected with the breach. Section 11 was designed to introduce a causation requirement, aligning the law with commercial expectation.^[2]

Section 11 applies to terms relating to particular kinds of loss (e.g., a fire alarm warranty for fire losses), particular locations (e.g., a security requirement for specified premises) or particular times (e.g., a "closed for business" condition for theft losses). It does not apply to terms defining the scope of the cover overall (such as the basic insuring clause) or to terms relating to disclosure or misrepresentation.^[3]

Legal / Regulatory basis §

Section 11 is set out in three subsections. Subsection (1) defines the scope: it applies to "a term (express or implied) of a contract of insurance, other than a term defining the risk as a whole" where compliance with the term would tend to reduce the risk of one or more of (a) loss of a particular kind, (b) loss at a particular location or (c) loss at a particular time.^[4]

Subsection (2) sets out the substantive rule: if a loss occurs, and the term has not been complied with, the insurer may not rely on non-compliance to exclude, limit or discharge its liability if the insured satisfies subsection (3).

Subsection (3) sets out the burden on the insured: the insured must show that "the non-compliance with the term could not have increased the risk of the loss which actually occurred in the circumstances in which it occurred."^[5]

The provision applies to terms whether they are characterised as warranties, conditions precedent, exclusions or otherwise. The label is not determinative; the question is whether the term operates to reduce the risk of a particular kind of loss. The section thus operates as an overlay on existing wording without requiring rewriting of contracts.

Section 11 cannot be displaced by general words. Sections 16 and 17 allow parties to a non-consumer contract to derogate from section 11, but only by including a term that is clear and unambiguous and brought to the insured's attention before the contract is entered into. The transparency requirements significantly constrain insurers' ability to revert to the pre-2015 position by drafting alone.^[6]

How it works in practice §

In practice, section 11 has had a profound effect on claims handling under property and liability policies that contain risk-management terms. The analysis when a breach is alleged proceeds in three stages.

First, the insurer identifies the term relied on and characterises it as a risk-mitigation term within section 11(1). Examples include sprinkler maintenance warranties (intended to reduce fire risk), alarm warranties (intended to reduce theft risk), hot-work permit conditions (intended to reduce fire risk during specific activities), and trading-hours conditions (intended to reduce risk during particular periods).

Second, the insurer establishes that there was non-compliance with the term and that the loss occurred. This is usually a factual matter, established by reference to maintenance records, security audits, witness statements and other contemporaneous evidence.

Third, the insured has the opportunity to show that the non-compliance could not have increased the risk of the loss that actually occurred. The burden is on the insured. The phrase "could not have increased the risk" is more generous to the insurer than a pure "but for" causation test: even a remote possibility of increased risk is sufficient to defeat the insured's section 11 defence. The test focuses on the circumstances in which the loss actually occurred, not on the abstract possibility of a connection.^[7]

The interaction with section 10 is important. Where a warranty has been breached, section 10 suspends the insurer's liability during the period of breach. Where the loss occurs during the period of breach but is unconnected with the subject-matter of the warranty, section 11 may nonetheless enable the insured to recover. The two provisions thus operate as complementary protections.

Brokers and risk managers use section 11 as a negotiating tool at placement, seeking to recharacterise blanket warranties as risk-specific terms and to ensure that any contracting-out language meets the transparency requirements.^[8]

Common variations §

The breadth of section 11 means that it applies across most classes of commercial insurance, but its practical effect varies. In property insurance, terms relating to fire protection, security, occupancy and waste management are routinely captured. In liability insurance, terms relating to contractual procedures, accreditation and safety management may be captured. In motor insurance, terms relating to use, garaging and authorised drivers are typically captured.

Section 11 does not apply to terms defining "the risk as a whole" — that is, to the basic scope of the policy. For example, an exclusion of cyber risk from a property policy is not a term within section 11 because it defines the risk rather than a risk-mitigation requirement. Distinguishing risk-defining terms from risk-mitigation terms can be difficult and is likely to generate continuing case law.

The provision applies to all non-consumer insurance and reinsurance contracts entered into, varied or renewed on or after 12 August 2016. For consumer insurance, the Financial Ombudsman Service typically applies an analogous principle of proportionality.

For programmes with overseas elements (where the contract is governed by English law), section 11 applies in full. For contracts governed by other laws, the principle does not apply except by way of contractual incorporation.

Example §

A manufacturing client's combined policy contains a warranty that "all hot work shall be carried out only under a permit-to-work system". In June 2026 an employee carries out welding without a permit, causing a small fire that is contained without significant damage. In December 2026 the premises suffer major flood damage following a burst pipe in an unrelated part of the building. The insurer alleges breach of the hot-work warranty in respect of the June incident and seeks to refuse the December flood claim.

Under section 11, the insurer cannot rely on the hot-work breach to defeat the flood claim. The hot-work warranty was clearly intended to reduce the risk of fire loss; the December loss was a flood unconnected with hot-work. The breach could not have increased the risk of a burst-pipe flood occurring six months later in a separate area of the building. The flood claim is paid in full.

If, instead, the December loss had been a fire originating in the welding bay, the section 11 analysis would have been different: the hot-work warranty was directly aimed at the risk of fire in those circumstances, and the insured would not be able to discharge the burden under section 11(3).

See also §

• /wiki/warranty-insurance/ — terms most commonly engaging section 11
• /wiki/warranty-to-suspensive-condition/ — section 10 companion provision
• /wiki/insurance-act-2015/ — parent statute
• /wiki/fair-presentation-of-the-risk/ — related disclosure duty
• /wiki/material-misrepresentation/ — alternative ground for remedy
• /wiki/marine-insurance-act-1906/ — historical framework
• /wiki/contract-certainty/ — related market practice initiative

References §

1. ↑ Insurance Act 2015, section 11, https://www.legislation.gov.uk/ukpga/2015/4/section/11
2. ↑ Law Commission and Scottish Law Commission, "Insurance Contract Law: Business Disclosure; Warranties; Insurers' Remedies for Fraudulent Claims; and Late Payment" (Law Com No 353 / Scot Law Com No 238, July 2014), https://lawcom.gov.uk/
3. ↑ Insurance Act 2015, section 11(1)
4. ↑ Insurance Act 2015, section 11(1)
5. ↑ Insurance Act 2015, section 11(2)-(3)
6. ↑ Insurance Act 2015, sections 16-17
7. ↑ Insurance Act 2015, section 11(3)
8. ↑ Insurance Act 2015, sections 11, 16 and 17