Utmost good faith - The moral hazard

(James v CGU Insurance plc October 2001)

The assured is under a duty to disclose all material facts prior to the making of a policy, and material facts may relate either to the physical hazard or to the moral hazard. The latter category is well recognised but its precise content has to date eluded precise definition. Consideration of the types of factors which may comprise the moral hazard were considered by Moore-Bick J in James v CGU Insurance plc October 2001, to be reported in [2002] Lloyd’s Rep IR. The case also involved allegations of arson and failure to disclose facts relating to the physical hazard.