Utmost Good Faith, Fraud, Misrepresentation and Non-Disclosure

Insurance contracts require utmost good faith uberrimae fidei – the duty is mutual – imposed on both the insurer and the insured. There is no class of documents to which the strictest good faith is more rigidly required in the courts of law than policies of insurance. Utmost good faith, fraud, misrepresentation and the duty to disclose, like no other area of insurance, has received substantial attention from insureds, insurers, lawyers and the judiciary. Materiality in an action for misrepresentation is the same as that for non-disclosure. In the absence of express language, no distinction between possible causes of non-disclosure operates. ‘The crucial qualification is the right to avoid a contract on the basis of non-disclosure hinges on materiality.’ A critical element of an action for misrepresentation is materiality, that is if it would ‘influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.’.