Report No. 21
Time of disclosure.-The disclosure must be made before the contract is made, under section 18(1); as to the time when the contract is deemed to be effected, see section 21 of the English Act.
What should be disclosed.-Section 18(1) imposes a duty to disclose not only facts actually known, but also facts which, the section says, "ought to be known" by the assured. Section 18(3) gives a list of circumstances which need not be disclosed. Thus, if petrol is a usual cargo from America to France, that fact need not be disclosed.1
It may be mentioned here that the fact that another insurer had refused to insure the cargo or ship previously is not a material fact in marine insurance.2 Further, opinions need not be disclosed. Thus, the original insurer coming to the conclusion that he has insured a bad risk and getting it re-insured at a higher premium is not guilty of bad faith.3
Suggestion to add reference about "line" Rejected.-It has been suggested4 that in section 18(2), to make it more complete, the words "or in fixing the line which he will accept" should be added, because it is a well-established principle of underwriting to accept a smaller line on speculative business than on risks the past experience with which has been relatively favourable. It appears, however, unnecessary to make any such change. The section is comprehensive for all practical purposes.
Warranties.-Lastly, as regards section 18(3)(d), relating to circumstances covered by a warranty, it may be noted that if a warranty is broken, the insurance is nevertheless valid upto the time of the breach of the warranty, while in case of departure from good faith it is not so.
1. Mann & Co. v. General Marine Underwriters Ltd., (1922) 2 KB 300.
2. Glasgow Assurance Corporation v. Symondon, (1911) 16 Comm. Cases 109 (119): 104 LT 254: 27 TLR 245, quoted in Shipping Law by Lord Chorley, 3rd Edn., p. 288.
3. Glasgow Assurance Corporation's Case, already cited.
4. Dover, p. 322.