Research Handbooks in Financial Law series
Edited by Julian Burling and Kevin Lazarus
Chapter 4: Pre-contractual Information Duties: The Insured’s Pre-Contractual Duty of Disclosure – Convergence Across the Jurisdictional Divide
John Lowry 1. INTRODUCTION This chapter examines the pre-contract duty of disclosure borne by proposers for insurance. It traverses the English law on non-disclosure and misrepresentation as a means of setting the backdrop against which divergences of approach in the USA, Australia and Germany can be assessed. A particular focus of the chapter lies not merely on the deﬁciencies of the current law but is also directed towards examining reform proposals across the jurisdictions, together with recent legislative developments in the UK and Germany. It will be demonstrated that a remarkable degree of consensus has emerged across the jurisdictional divide with respect to the scope of the insured’s duty not to conceal or misrepresent facts material to the underwriting of risk. While non-disclosure and misrepresentation are distinct defences to a claim, they are frequently treated as one and the same thing by the English courts,1 no doubt because of the common practice of insurers raising both by way of defence to a claim. Nondisclosure is concerned with the insured’s duty to volunteer material facts, while misrepresentation concerns the insured’s duty to answer the insurer’s questions (generally contained in proposal forms) accurately and to ensure that any statement volunteered is true. The difﬁculty in drawing a bright line between non-disclosure and misrepresentation in insurance contracts can be seen in relation to an insured’s failure to answer a speciﬁc question raised by the insurer. Such failure, in English law, will be deemed to be a negative answer, that...
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