Material fact in insurance contact

drkpower

The test of what is and what is not a material fact for the purposes of an insurance contract is that a fact must be disclosed if it would influence a prudent insurer (in offering the insurance or setting the premium).

This usually applies to facts which are within the knowledge of the insured (ie.mefical conditions, previous convictions etc..) and which are not known to the insured.

however, is there a duty to disclose where that material fact is a matter of public or common knowledge and/or where the' fact' is equally known by the insured and the insurer?

I will give 2 examples just for illustrative purposes:
1. jim is travelling to orlando in the days running up to the arrival of hurricane 'sally' and he purchases travel insurance online. At the time, media reports indicate that the hurricane might hit orlando. Jim isn't a meteorologist, he has no particular knowledge over and above this. But he has seen the media reports and is aware of the possibilitythat orlando might be hit. He completes a standard online form and he is provided with insurance. Sandy hits orlando and the flight is canceled. He claims on his insurance and is denied on the basis of non disclosure of a material fact (that orlando might be hit by a hurricane).

2. Jim is travelling to the congo on holiday. E coli is endemic there. Jim is aware of this as it is on the w.h.o and oother travel websites. He has no particular medical knowledge. He purchases online travel and medical insurance and he is provided with insurance. He travels to the congo and ends up in hospitalwith e coli. His medical insurance claim is denied on the basis of non disclosure of a material fact (that e coli is endemic in congo).

Strangely, the issue of non disclosure of a material fact where that fact is already in the public domain/ is equally known by insured and insurer, is not explicitly covered in the standard text books. Any solid information would be appreciated particularly if anyone knows of any case law on point.

jblack

Common law, unless expressly stated in the governing contract, obliges no particular duty to disclose. The position in civilian countries is different.

There are certain instances where non-disclosure will amount to a representation or even fraud such as

Partial disclosure that distorts the truth
Change of position from a represented one see Spice Girls v. Aprilla
and a few more I cannot recall

However, insurance contracts are an exception to this in that they are uberrimae fides - and that facts known only to the insured that would be likely to affect:

• a) the indemnity's ability to insure
  b) the indemnity's ability to quantify premium

therefore, depending on the wording of the form, it may be that the prospective insured is not under an obligation to disclose facts within the knowledge (actual or constructive) of the indemnity.

jblack

there's an article in New Civil Engineer, 17 January 1974 on pg. 32 called "Why your insurer must know", which deals with defining the difference between known facts and facts which ought to have been know.

Charriot Inns Limited v. Assicurazioni Generali SpA and Coyle Hamilton Hamilton Philips Ltd (Supreme Court 1981 is the seminal Irish case on the issue and sets forth criteria on what information should be given.

I thought I had a lot more on this. I'll see if I can root it out later.

drkpower

jblack wrote: »

Charriot Inns Limited v. Assicurazioni Generali SpA and Coyle Hamilton Hamilton Philips Ltd (Supreme Court 1981 is the seminal Irish case on the issue and sets forth criteria on what information should be given..

Thanks jblack, but i dont think Chariot Inns covers the specific issue i am interested in.

As it happens i think i have found a recent Irish case which sets out the position as I hoped it would be very concisely. My computer all of a sudden wont copy and paste (viruses...arrgggghhh) so I will post the extract tomorrow. the case name is Manor Park Homebuilders v AIG Europe (Ireland) Ltd, from 2009.