Split Created: Is a Clear Statement Required to Avoid the Application of the Doctrine of Uberrimae Fidei?

Per New Hampshire Ins. Co. v. C'Est Moi, Inc., 2008 WL 732487, *3-*4 (9th Cir. Mar. 20, 2008).

“We consider the doctrine that's on everyone's lips: uberrimae fidei.” With that dramatic beginning, Chief Judge Kozinski authors an opinion creating a circuit split on this fascinating issue of maritime insurance contracts. Note, however, that Judge Kozinski probably does not mean this introduction facetiously – Eugene Volokh, a previous clerk, recently wrote a blog post concerning the phrase, and Judge McKeown wrote a long opinion concerning the doctrine just a month ago. The doctrine – which literally translated means ‘of the most abundant good faith’ – requires those seeking marine insurance to reveal every fact that is material to the risk.

The insurance policy in this case contained a provision which voided coverage if the applicant intentionally conceals or misrepresents facts relating to the insurance application or risk thereof. The question is whether this provision was sufficient to override the default application of uberrimae fidei. Judge Kozinski says no and requires an ‘unequivocal’ and ‘clear policy statement’ demonstrating both parties’ intent to supercede the common law obligation. In so holding, he acknowledges the creation of a circuit split with the CA 11, which held that similar language did override the default common law rule. Interestingly, this whole discussion appears to be dicta, because the panel continues to affirm the district court’s finding that there was material misrepresentation sufficient to void the insurance even under its own terms.

For additional coverage, see The California Appellate Report, The California Blog of Appeal, Decision of the Day, and the Volokh Conspiracy.