Uberrimae Fidei is Alive and Well

The US Court of Appeals for the Ninth Circuit affirmed the validity of the principle of uberrimae fidei as applied to marine insurance contracts. Defendant fishing vessel owners insured their vessels with plaintiff marine insurers but failed to disclose that their policy with another company had been cancelled for non-payment of premiums and for failure to cooperate in the investigation of various marine casualties and oil spills that were the subject of claims. After the fishing vessel owners submitted various claims, plaintiff insurers commenced an investigation and learned that the owners had failed to disclose certain material facts when they applied for the policy. The insurers then brought this declaratory judgment action, seeking to have the policies declared void ab initio. The court held that both the insured and the insurer in a marine insurance contract have a duty to maintain the highest standard of good faith (uberrimae fidei). Violation of this standard by the insured in this case allows the insurer to void the marine insurance contract. Certain Underwriters at Lloyd’s, London v. Inlet Fisheries, Inc., No. 06-35383 (9th Cir., February 11, 2008). (HK Law)