John Lowry

Abstract

This article explores the current state of United Kingdom law concerning the duty of good faith in insurance contracts. Recent case law shows that the insured’s duty of disclosure continues to evolve, and the article argues that, given the fragmented nature of the current law, future reform should focus on creating a consistent regime for insurance contracts—one flexible enough to encompass both consumer and commercial insurance while maintaining clear and certain objectives. The first part examines the insured’s duty of disclosure as originally articulated by Lord Mansfield CJ. The second part analyzes post–Carter v. Boehm case law, which developed the notion of good faith and expanded it into a duty of utmost good faith. The third part explores the discomfort of UK courts and law reform agencies regarding the severity of the insured’s duty and the injustices that result when insurers avoid policies for nondisclosure. The fourth part assesses recent judicial efforts to alleviate the harshness of the existing regime. The concluding section briefly reviews the 2009 Consumer Insurance (Disclosure and Representations) Bill, published by the English and Scottish Law Commissions, and proposes an alternative model informed by developments in Australian law. The article argues that reform should focus on balancing the economic costs of change with the benefits of a more equitable system that does not artificially distinguish between consumer and business insureds.

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