The claimants sought payment for water damage under their policies. The insurer alleged non-disclosure. The judge had found the claimants to be honest, and criticised the defendants witnesses. The claimants had been involved in companies which had been in insolvent liquidation, but the proposal from did not raise the issue. Was the non-disclosure material?
Held: ‘The test of materiality is by reference to what would influence the judgment of a prudent insurer. This is an objective test, and the characteristics to be imputed to a prudent insurer are in substance a matter for the courts to decide. There is room for a test of proportionality, having regard to the nature of the risk and the moral hazard under consideration. There may be things which are too old, or insufficiently serious to require disclosure, whether or not there is exculpatory material. And in cases where the information would be material and disclosable if there were no exculpatory material, the degree of conviction that the exculpatory material must carry, must depend on all the circumstances known to the insured. ‘
Judges:
Tugendhat J
Citations:
[2006] EWHC 2811 (QB)
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
Cited – Pan Atlantic Insurance Co Ltd and Another v Pine Top Insurance Co Ltd HL 27-Jul-1994
The plaintiff had written long term (tail) insurance. The defendant came to re-insure it. On a dispute there were shown greater losses than had been disclosed, and that this had been known to the Plaintiff.
Held: ‘material circumstance’ which . .
Cited – Brotherton and Another v Aseguradora Colseguros S A and Another CA 22-May-2003
Allegations against the insured were extant at the date of the proposal. The insurers sought to avoid the claim. . .
Cited – Inversiones Manria SA v Sphere Drake Insurance Co. plc (The Dora) 1989
The court considered the relevance of moral hazard for an insurer accepting an insurance proposal: ‘When accepting a risk underwriters are properly influenced not merely by facts which, with hindsight, can be shown to have actually affected the risk . .
Cited – Assicurazioni Generali Spa v Arab Insurance Group (BSC) CA 13-Nov-2002
Rehearing/Review – Little Difference on Appeal
The appellant asked the Court to reverse a decision on the facts reached in the lower court.
Held: The appeal failed (Majority decision). The court’s approach should be the same whether the case was dealt with as a rehearing or as a review. . .
Cited – North Star Shipping Ltd and others v Sphere Drake Insurance Plc and others CA 7-Apr-2006
A claim was made under a marine insurance policy for damage caused to a vessel by an explosion. Underwriters alleged that they were entitled to avoid the policies for (inter alia) non-disclosure of the existence of criminal proceedings in Greece . .
Lists of cited by and citing cases may be incomplete.
Insurance
Updated: 15 July 2022; Ref: scu.245962