WHITHER THE DUTY OF GOOD FAITH IN UK INSURANCE CONTRACTS

This article explores the current state of the law in the United Kingdom concerning the duty of good faith in insurance contracts. Recent case law provides that the duty of disclosure by insureds is constantly being refined. It argues that due to the current fragmentation of the law, future reform should be focused on creating a consistent regime for insurance contracts. Such regime should be flexible enough to encompass both consumer and commercial insurance, while demonstrating certain and clear objectives. The first part examines the duty of disclosure by an insured as formulated by Lord Mansfield CJ. The second part analyzes the case law that followed Carter v. Bohem, which developed the notion of good faith and expanded it into a duty of utmost good faith. Third, the discomfort of the UK courts and UK law reform agencies over the severity of the insured's duty along with the injustices that result when insurers avoid a policy for nondisclosure is explored. Fourth, recent judicial opinions that attempt to alleviate the position of the insured are assessed. The fifth and concluding part of this article briefly examines the 2009 [UK] Consumer Insurance (Disclosure and Representations) Bill published by the English and Scottish Law Commissions in December 2009. It constructs an alternative model which takes account of recent developments in Australian law. It is argued that the focus should be on balancing the economic costs of reform with the benefits of a more balanced regime which does not create a distinction between consumer and business insureds.