Did it operate as an inducement to the insurer to enter into the policy In order to be entitled to avoid a contract of insurance or reinsurance on the ground of non-disclosure the insurer must show both that the fact not disclosed was material, and that its non-disclosure induced the contract. To be material a fact did not have to have a decisive influence on the mind of the prudent underwriter. The test is as stated in subsections 18(2) and 20(2) which relate to non-disclosure and misrepresentation respectively and which set out the common law principles relevant to non-marine (as well as marine) insurance. The material non-disclosure or misrepresentation must induce the contract. It is not sufficient that the non-disclosure or misrepresentation is material. ". . . there is to be implied in the Act of 1906 a qualification that a material representation will not entitle the underwriter to avoid the policy unless the misrepresentation induced the making of the contract, using "induced" in the sense in which it is used in the general law of contract" and "in practice the line between misrepresentation and non-disclosure is often imperceptible."
The claimants insured their yacht with the defendants for a value as certified by an independent valuer. The defendants claimed he had misrepresented the value in the proposal. The words 'sum insured' indicated a ceiling on a claim on an unvalued policy. There was no indication from the insurers on the proposal form that they would agree the value, but rather they asked only for the value to be insured. The policy was therefore an unvalued policy.
HIH Casualty and General Insurance Ltd and Others -v- Chase Manhattan Bank and Others  1 Lloyd's Rep 30
19 Sep 2000
As a contract for speculation, a duty of utmost good faith is not implied in a contract insurance. The duty of disclosure by an insured can be limited by the contract as can the freedom of the insurance company to avoid liability. If the wording is clear enough, even a deliberate non-disclosure amounting concealment might be excused. Nevertheless the contract might be rescindable at the option of the insurer.
California Appellate Districts
Civil Procedure, Contracts, Injury And Tort Law, Insurance Law
Wilson v. 21st Century Ins. Co.
Summary judgment for defendant-insurer in an action for breach of contract and tortious bad faith in adjusting plaintiff's underinsured motorist claim is reversed where triable issues of fact existed as to whether defendant failed to thoroughly investigate and evaluate plaintiff's claim, and plaintiff was entitled to additional discovery.
The insured purchased a house, converted it to two apartments and left Cape Breton to find work in British Columbia. The house remained vacant