Material Facts

Question 1

Which case defines a material fact?

Answer 1

Marine Insurance Act

Question 2

What is a material fact?

Answer 2

Something which would influence the judgement of a prudent insurer in assessing risk

Question 3

Material facts relate to moral or physical hazards, PHYSICAL hazards are;

Answer 3

Fire insurance - construction of building, nature of use

Motor insurance - age/type of car, age of driver

Theft insurance - nature of stock, nature of security (alarms)

Question 4

Material facts relate to moral or physical hazards, MORAL hazards are;

Answer 4

Insurance history - declinatures by other insurers, claims history, fraud

Personal history - criminal convictions

Question 5

Which case examins the nature of moral hazards?

Answer 5

Roselodge v Castle - judge ridiculed the insurer for the idea that because the customer had stolen apples age 12 this would be material to insurance many years later.

Question 6

Not all mterial facts need to be disclosed, this is because the insurer ought to know them or could find out;

Answer 6

• Facts of law
• Facts of public knowledge (state of war, particular areas are susceptible to natural disasters)
• Facts that lessen the risk (fitting an intruder alarm reduces the risk of theft but does not need to be declared to the insurer - although customer’s would be silly not to!)
• Facts where the insurer has waivered its right to the information (if insurer doesn’f follow up unanswered Q’s it cannot claim non-disclosure in the future)
• Facts that a survey should have revealed (only applies when insurer has carried out a survey) as long as the customer hasn’t concealed anything from the surveyor, if the surveyor misses something important that is a material fact the insurer cannot claim non-disclosure
• Facts that the insured does not know (different rules apply to people acting in a private capacity i.e. learning difficulties) the tests are whether it’s reasonable to expect the customer to disclose a material fact and whether any misrepresentation was negligent
• Facts outside the scope of specific Q’s (i.e. if insurer asks for details of claims over the past 3 years, anything over 3 years would not need to be disclosed)
• Facts covered by policy terms (if policy excludes something such as scuba diving there is no reason for a customer to diclose the fact they enjoy scuba diving)
• Spent convictions