Marine insurance contracts are based on the good faith of the contracting parties, and if the opposite is proven, the obligations arising from it for the other party may not be valid. In this context, good faith is proven objectively through a series of mandatory disclosures, representations, and warranties by the parties.
In this text, we will examine the concept of disclosures.
Specifically, the insured has an obligation to disclose to the insurer—before the agreement is completed—every relevant fact that they know, while it is simultaneously considered that they themselves know every fact relevant to their business which they ought to know. The non-disclosure of a relevant fact gives the insurer the right to refuse the fulfillment of the obligations arising from the contract.
According to the Marine Insurance Act, a relevant fact is defined as any fact the knowledge of which by a prudent insurer could influence their judgment in calculating the premium or in proceeding or not with the specific insurance. The term initially appears to be in favor of the insurer, but ultimately it is in favor of securing equal terms of information between the two parties.
The cases that are explicitly excluded from the duty of disclosure are as follows:
In practice, which facts are considered relevant or not is decided by the court, and these include the information and awareness of the insured.
* The information for the above article was drawn from the book “Maritime Theory & Entrepreneurship in the Age of Quality” by Alkis I. E. Korres and Yannis N. Thanopoulos (INTERBOOKS Publishing, p. 61).
