Marine Insurance - The Continuing Duty of Utmost Good Faith

The Sea Star

Comments of Mr Justice Hirst in The Litsion Pride [1985] 2 Lloyd’s Rep 437 , to the effect that the duty of utmost good faith owed by the assured to his insurers continued beyond the making of the contract, created a good deal of uncertainty in the law. It was argued on numerous occasions in the courts, that insurers had the right to avoid a claim or even the policy where the assured had failed to disclose material facts when making a claim, and there was speculation as to whether the duty applied to matters other than claims. The courts nevertheless gradually narrowed the scope of the duty, and the principles which could be gleaned from the cases were summarised by Mr Justice Aikens in K/S Merc-Scandia XXXXII v Lloyd’s Underwriters [2000] Lloyd’s Rep IR 694 . The matter has been considered for the first time by the House of Lords in The Star Sea, although not all of the problems raised by the continuing duty arose and some areas of difficulty remain outstanding.