Utmost good faith

Waiver

A failure to disclose material facts, which otherwise gives the insurers the right to avoid the policy ab initio, can be waived in a number of different ways. First, the insurer may waive disclosure in the first place. This will occur where the manner in which information is sought by the insurers makes it clear to the assured that they are not interested in particular classes of facts. Waiver of this type may appear as an express clause in the application or policy, stating that disclosure is not required, or it may be implicit from the insurers’ conduct on placement. Second, waiver may arise where the insurers’ attention is drawn to the possible existence of material facts but they choose not to follow up the lead given to them by the assured. Third, the insurers may, following a loss and the making of a claim, waive their right to avoid the policy by treating the policy as valid for all purposes. The first two forms of waiver relate to the disclosure itself so that there is never a breach of duty; the final type relates to the right to rely upon a remedy for breach of duty. In New Hampshire Insurance Co v Oil Refineries Ltd [2002] Lloyd’s Rep IR (forthcoming), decided in April 2002, HHJ Chambers QC considered the first two types of waiver.