The doctrine of uberrimae fidei (utmost good faith) is an ancient one. Many countries have in the recent past moved away from it and cases of marine insurers trying to invoke this doctrine are now rare. Recently in US there was one – The Making Waves [2021] where the insurers, QBE were seeking to invoke it and avoid paying the claim. Reason being owner had failed to disclose (i) that vessel had grounded some 4 years earlier, and (ii) the total number of water crafts previously owned by him. Did the insurer succeed?
US Court of Appeals started by examining the development of law in this area, and how the once similar systems of UK and US are now not harmonised. Importantly US had not followed UK’s lead on abolishing this doctrine. Moreover, in this case owner wanted the insurance to be taken out swiftly & insurers had no time to check the history of the vessel or its owner. Policy was issued within 36 mins.
Court said that QBE had no need to show that it actually relied on owner’s omissions in order to prevail under the doctrine. More importantly the incomplete disclosure of accident history crossed the threshold for materiality. A hard pill to swallow for assureds in US! ...but then business in UK and other countries that have scuttled the doctrine is always open.
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