Suppose someone purchases marine insurance and fills out the various forms. The person purchasing the insurance does not disclose all information that is asked of him. The insurance request form asks whether he has owned any other ships or similar watercraft and, if he has, to fill out a description and dates of ownership of those ships and watercraft. The form also asks whether he has been involved in any accidents while operating a ship or other watercraft and, if he has, to fill out a description and dates of occurrence for those accidents. The man states that he owned two watercraft and further states on the form that he has never been in an accident that involved watercraft. In reality, he previously owned seven watercraft and was involved in an accident that involved watercraft.
Ubberima Fide
Maritime law utilizes the common law doctrine of ubberima fide (often referred to as ubberimae fidei) with respect to insurance contracts. In translation from the Latin, ubberima fide means “utmost good faith,” wherein parties to insurance contracts must act with utmost good faith or else the contract is void. The point is that the knowledge of material facts lie strictly with one party and that party therefore has the obligation to disclose these facts. A lack of disclosure of those facts will trigger an invalid and unenforceable contract.
The next issue when determining if a party to an insurance contract acted in complicance with the ubberima fide doctrine is decipher whether an undisclosed fact is material. When an applicant for an insurance policy omits a material fact from his or her application and is in violation of ubberima fide, the insurance company is not bound by the contract between the parties.
QBE Seguros v. Morales-Vazquez
The above circumstances were the facts of this case, which was decided recently, where the person applying for marine insurance coverage did not disclose how many ships he previously owned and did not disclose previous watercraft accidents. The US District Court for the District of Puerto Rico cited the case of Caitlyn v. Lloyd’s that “when the marine insured fails to disclose to the marine insurer all circumstances known to it and unknown to the insurer which ‘materially affect the insurer’s risk,’ the insurer may void the marine insurance policy at its option.” Because the applicant was not forthcoming about his previous history, such omissions are considered “material” and therefore do not satisfy the ubberima fide doctrine. As a result, the insurance company is not obligated to insure the applicant and his claim is denied.
Note that the plaintiff cited English law that abolished the doctrine of ubberima fide. Nonetheless, US law still holds on to the doctrine. Consequently, this high standard is still relevant for insurance contracts governed by US law.
Are you involved in maritime law? You need a lawyer who is knowledgeable in the intricacies of maritime law. Contact the Kolodny law firm, a maritime law firm.
Alan Kolodny is committed to representing injured clients in Texas and throughout the United States. Alan earned his B.A. from Rice University and his J.D. from Southern Methodist University.
He focuses his practice on representing plaintiffs in personal injury cases involving the following matters: maritime and offshore accidents, including those under the Jones Act; automobile and 18-wheeler truck accidents; and industrial site accidents, work-related accidents, and claims for injured railroad workers under the Federal Employers’ Liability Act.
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