Application of the Principle of Uberrimae Fidei (Utmost Good Faith)

Having understood the meaning, rationale, and scope of the principle of uberrimae fidei, it is
essential to examine how courts have applied it over time from classical English authorities to
modern Kenyan jurisprudence.
The evolution of its application reflects a gradual movement from strict enforcement that
favoured insurers to a more equitable approach that recognizes the need for mutual good faith
and proportionality.
The Classical Foundation: Carter v Boehm (1766)1
This landmark decision by Lord Mansfield forms the bedrock of the doctrine.
The insured, Governor Carter, failed to disclose that Fort Marlborough was weakly defended
and under threat of a French attack. The insurer repudiated liability for non-disclosure.
Held: Insurance contracts are contracts of uberrimae fidei requiring both parties to act with
the utmost good faith.
Lord Mansfield observed that “good faith forbids either party, by concealing what he knows,
to draw the other into a bargain from his ignorance of that fact.”
Principle established:
The insured must disclose all material facts known to him but unknown to the insurer facts
that would influence the insurer’s judgment in deciding whether to accept the risk or at what
premium.
This case set the doctrinal cornerstone for all later judicial developments.
Strict Enforcement of Non-Disclosure: Container Transport International Inc v Oceanus
Mutual Underwriting Association (Bermuda) Ltd (1984) 2
Here, the insured failed to disclose certain past losses. The Court of Appeal upheld the
insurer’s right to avoid the policy, even though the non-disclosure was not fraudulent.
Illustration

1
Lambert v Co-operative Insurance Society Ltd [1975] 2 Lloyd’s Rep 485.

2
Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC
501
Any concealment of a material fact whether innocent or intentional made the policy voidable
at the insurer’s option.
This case represents the strict classical approach, where the duty of disclosure was absolute,
and materiality alone was enough to defeat recovery.
Refinement of Materiality and Inducement: Pan Atlantic Insurance Co Ltd v Pine Top
Insurance Co Ltd [1995] 3
In this case, the insured reinsured a marine risk but omitted to disclose certain losses. The
insurer avoided the policy for non-disclosure. The House of Lords, however, clarified that for
an insurer to avoid liability, two elements must be proved:
1. The undisclosed fact must be material, and
2. The non-disclosure must have induced the insurer to enter into the contract on those terms.

Non-disclosure alone does not automatically void the policy. The insurer must show that the
omission materially influenced their judgment. This marked a shift from the rigid classical
approach to a fairer, more balanced standard.

Application of Innocent Misrepresentation – Economides v Commercial Union

4
Economides v Commercial Union Assurance Co. plc [1998] QB 587.
Continuing Duty: Lambert v Co-operative Insurance Society Ltd [1975] 5
The insured failed to disclose her husband’s criminal record when renewing her policy.
Although the omission was not intentional, the insurer was allowed to repudiate the policy.
Holding:
The duty of disclosure is continuous and extends to renewals and variations of insurance
contracts. The insured must reveal any new material facts arising before renewal. The case
underscores that good faith extends beyond formation and throughout the policy period.
Application in Kenya: APA Insurance Limited v Gatugi [2024] (eKLR)6
In this case, the insured failed to disclose the material fact that his vehicle that was involved
in a road accident was used for commercial purpose instead he had stated it was for personal
use. The Court held that the action of the insured amounted to material non-disclosure and
thus the insurer was entitled to avoid the policy.
Punitive Damages Against Insurer: Kenya Alliance Insurance Co. Ltd v Eunice Nyaboke
Nyaribari; Cleophas Nyamongo (Interested Party) [2021] KEHC 2243 (KLR)7
In this case, the judge explicitly awarded “exemplary / punitive damages” (Kshs. 2,500,000)
to the insured for the insurer’s persistent refusal to indemnify even after admitting liability.
The facts involved a motor-vehicle insurance claim. The insurer allegedly acted in bad faith
by refusing indemnity even though the claim was valid. The court found the insurer culpable
enough to warrant punishment beyond mere compensation.
The doctrine of uberrimae fidei imposes a reciprocal duty insurer, too, must act in utmost
good faith. Where an insurer acts dishonestly or maliciously to avoid payment, courts may
award punitive damages to deter bad faith and promote fairness.
What amounts to Materiality- Mutual and Federal Insurance Co Ltd v Oudtshoorn
Municipality (1985) (1) SA 419 (A)8

5
Mutual and Federal Insurance Co Ltd v Oudtshoorn Municipality (1985)
(1) SA 419 (A).

6
Kenya Alliance Insurance Co. Ltd v Eunice Nyaboke Nyaribari; Cleophas
Nyamongo (Interested Party) [2021] KEHC 2243 (KLR).

7
APA Insurance Limited v Gatugi [2024] KEMC 18 (KLR).
8
Container Transport International Inc v Oceanus Mutual Underwriting
Association (Bermuda) Ltd (1984) 1 Lloyd’s Rep 476
In this South African case, the court held that materiality is determined objectively — by
what a reasonable person would consider significant to the insurer’s judgment.
This objective test aligns with modern principles of fairness, requiring that disclosure
obligations be judged not by what the insured thinks important, but by what a prudent insurer
would regard as material.

The UK’s Insurance Act 2015 replaced the strict duty of uberrimae fidei with the duty of
fair presentation, requiring insureds to disclose information in a clear and accessible manner
while obliging insurers to ask for clarification where necessary.
The reform reflects a more balanced allocation of responsibility. Although Kenya has not
fully adopted this legislation.
Conclusion
From Carter v Boehm through to CIC v Chemirmir, the doctrine of uberrimae fidei has
evolved from a rigid insurer-friendly rule to a balanced principle grounded in fairness,
honesty, and mutual trust. Kenyan courts still uphold the classical requirement of full
disclosure but increasingly recognize reciprocal duties on insurer.