Opinion ID: 579835
Heading Depth: 3
Heading Rank: 1

Heading: Utmost Good Faith

Text: 14 In a marine insurance contract, the parties are bound to exercise the utmost good faith, or uberrimae fidei. Pacific Queen Fisheries v. Symes, 307 F.2d 700, 708 (9th Cir.1962) (quoting the Marine Insurance Act of 1906), cert. denied, 372 U.S. 907 (1963); see also Alex L. Parks, 1 The Law and Practice of Marine Insurance and Average 216 (1987). 15 California law recognizes that the duty of an insured under a marine insurance contract is different from what it is under other types of insurance. Washington Int'l Ins. Co. v. Mellone, 773 F.Supp. 189, 191 (C.D.Cal.1990). According to section 1900 of the California Insurance Code: 16 In marine insurance each party is bound to communicate, in addition to what is required in the case of other insurance: 17 (a) All the information he possesses and which is material to the risk, except such as is exempt from such communication in the case of other insurance. 18 (b) The exact and whole truth in relation to all matters that he represents or, upon inquiry assumes to disclose. 19 The insured is bound, even if not asked, to reveal every fact within his/her knowledge that is material to the risk. Hartford Ins. Co. v. Garvey, 1989 A.M.C. 652, 658 (N.D.Cal.1988). A marine insurance policy is void ab initio when the insured fails to disclose material increases in the risks insured. Pacific Fisheries, 307 F.2d at 706, 711; Reliance Ins. Co. v. McGrath, 671 F.Supp. 669, 678 (N.D.Cal.1987). The insurer is entitled to rescission if it can show nondisclosure of a fact material to the risk, regardless of intent. Cal.Ins.Code § 1904; Washington Int'l Ins. Co., 773 F.Supp. at 191. An insurer also is entitled to rescission if the insured made an intentional misrepresentation, regardless of materiality. Id. 4 20 To be material, the fact must influence the judgment of a reasonable insurer in fixing the premium, or in determining if it will take the risk. Marine Insurance Act of 1906, § 18(2); see also Cal.Ins.Code § 334 (materiality determined solely by the probable and reasonable influence of the facts upon the party). Materiality is a factual finding reviewed for clear error. Port Lynch, 754 F.Supp. at 822-23. 21