Wednesday, 18 November 2015
Disclosure and insurance (Uberrima fides – utmost good faith)
The doctrine of uberrima fides translates as a requirement to exercise the “utmost good faith” when dealing with matters of insurance.
Disclosure and Insurance
The doctrine of uberrima fides translates as a requirement to exercise the "utmost good faith" when dealing with matters of insurance. The rule essentially requires us to disclose all "material facts" when applying for or renewing insurance. It has been criticised frequently, owing to the difficulty that arises from expecting the lay community to know what constitutes a "material fact" and enforcing insurance refusals when they don't. Obviously you shouldn't have to be a barrister to be sure you have adequate insurance, and you shouldn't have to hire one in order to make a claim.
Failed to give full disclosure?
If you have been refused home insurance because you failed to tell your insurer something that was relevant to your application, you may already know how unfair uberrima fides can be. There is some cause to believe that the intention of the original doctrine has been misapplied through an incorrect reading of legal precedent set in 1766. The much cited case of Carter v. Boehm involved an insurer refusing to pay out to the governor of Fort Marlborough on the island of Sumatra, when the fort was attacked by the French. Being refused buildings insurance on a similar scale today would make it very hard for the governor to get a quote elsewhere.
The insurer's defence against the insured rested on the argument that the governor did not disclose either the apparent weakness of the fort, or the fact that it was likely to be attacked by the French, as material facts. The judgement laid down is one that has been used against many people who have been refused house insurance in the UK for centuries. It stated (in brief) that the facts on which the risk should be calculated were known by the insured only; the insurer trusts the insured to disclose all relevant facts, without omitting anything that would make the insurer estimate the risk incorrectly.
Disclosure is mandatory
Though this interpretation has been used countless times to establish that it is the insured party's responsibility to disclose material facts, the fact that the case ultimately found in favour of the insured (and not the insurer) seems to have been overlooked completely. Sadly, even though there might be a case for a review of the applied doctrine, it currently stands and must be adhered to. If you have been refused home insurance, you must disclose this as a material fact when applying for new insurance.
Unfortunately, the reason why you were refused house insurance previously is also likely to count as a material fact so must also be disclosed. This means that you are likely to have two non-standard risks counting against you, instead of just one. The good news is that you can still get a competitive online quote from HomeProtect, no matter why you were refused buildings insurance previously. At HomeProtect we believe that everyone should have fair access to insurance, and that being refused home insurance in the past should not prevent you from getting it in the future.