For business insurance, the Insurance Act 2015 replaced the old duty of disclosure with the duty of fair presentation. Before the contract starts, the insured must disclose every material circumstance it knows or ought to know, or failing that, enough information to put a prudent insurer on notice that it needs to ask further questions. The presentation must be made in a manner that is reasonably clear and accessible, material representations of fact must be substantially correct, and statements of expectation or belief must be made in good faith. This is the commercial regime: consumers are covered by different, lighter rules.

Fair presentation is the standard every business risk is placed against, and it is the reason a well-prepared presentation to insurers is not bureaucracy but claims protection: the work done before the policy starts decides how arguments end after a loss.

What must be disclosed

Every material circumstance the insured knows or ought to know. A circumstance is material if it would influence the judgement of a prudent insurer in deciding whether to take the risk and on what terms. Ought to know reaches beyond the person signing the proposal: it includes what a reasonable search of information available to the organisation would have revealed, which pulls in senior management and the people responsible for arranging the insurance.

The alternative limb matters in practice: where full disclosure is not achieved, giving the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries can satisfy the duty. That is the legal footing for a well-structured presentation that flags the difficult areas honestly.

How it must be presented

In a manner reasonably clear and accessible to a prudent insurer. Data-dumping a warehouse of documents on an underwriter, hoping the awkward fact is buried on page four hundred, fails the manner requirement by design. Facts must be substantially correct; expectations and beliefs must be honest.

What does not need disclosing

Circumstances that diminish the risk, things the insurer already knows, ought to know or is presumed to know, and anything the insurer waives. The duty is about giving the underwriter what a prudent insurer needs, not about reciting the obvious.

Why brokers exist in this regime

The duty of fair presentation is where broking stops being shopping and becomes representation. Structuring the reasonable search, deciding what is material, presenting the awkward history clearly rather than hopefully: that work is the fair presentation. For accountancy practices buying their own professional indemnity, and for any business insuring itself, it is the difference between a policy that responds and a dispute about what was said at inception.

Common questions

Does the Insurance Act 2015 apply to my home insurance?

No. Consumer insurance is governed by the Consumer Insurance (Disclosure and Representations) Act 2012, which asks consumers to take reasonable care answering the insurer’s questions. Fair presentation is the commercial standard.

What does ought to know mean for a company?

What a reasonable search of information available to the business would reveal, including what senior management and those arranging the insurance know. Not asking is not a defence.

What is the point of the on notice alternative?

It recognises that perfect disclosure is unrealistic: giving the insurer enough to know where it needs to dig satisfies the duty, provided it is done clearly and honestly.

Is a data dump a fair presentation?

No. The Act requires the presentation to be reasonably clear and accessible to a prudent insurer, which is aimed squarely at burying material facts in volume.

What happens if the presentation was not fair?

The Act provides proportionate remedies that depend on whether the breach was deliberate or reckless and on what the insurer would have done had the presentation been fair, ranging from avoidance to amended terms or a reduced claim. The detail is beyond this page; the practical answer is to get the presentation right.

Related guides

This page explains the duty of fair presentation in general terms. It is not legal advice and does not describe the terms of any particular policy.

Solar Insurance Services (Medway) Limited is registered in England and Wales, company number 05439438, and is authorised and regulated by the Financial Conduct Authority, firm reference number 459582.

Sources: Insurance Act 2015, section 3 (legislation.gov.uk).