Uberima Fidei

Uberima fidei is a latin phrase, which means utmost good faith. It is a legal doctrine which governs insurance contracts. In this kind of contract all parties must deal in good faith, making a full declaration of all material facts in the insurance proposal. There is no concealment or deception in such contract. If one of the parties to a contract has special knowledge he/she must disclose such knowledge relevant to the contract. Failure to disclose such facts will make the contract voidable.
The doctrine was originated from the case of carter V. Boehm (1766) 3 Burr  1905, the action was based upon a twelve months policy of insurance, taken out for the benefit of the governor of Fort Marlborough on the Island of Sumatra in the East Indies, by its being taken by a foreign enemy. The governor also had an insurance interest in goods which he owned, which were kept at the fort. Infact, the event insured against occurred: the fort was taken by Count D’ Estaigne, during the policy period. The defendant underwriter, Mr Charles Boehm denies that underwriters were liable to indemnify the insured because of fraud, as a result of the concealment of circumstances which ought to have been disclosed. Particularly, the weakness of the fort, and the probability of being attacked by the French.
The concealment should not have been done by the plaintiff, the plaintiff should have disclosed every thing which had to do with that insurance policy. If the insurer had known the facts, the case would have been different. In support of the insurer’s defence, two letters from the governor were relied upon – one to his brother, his trustee, the plaintiff in the case and the second to the governor of the East Indian company. The first letter to his brother indicated that the governor was more afraid than before that the French would attack. The governor speculated to his brother that the French had such an intention the previous year. They asserted that if the governor had disclosed what he knew or, what he ought to have known, he could not have obtained the insurance of the fort.
This was therefore a fraudulent concealment and the underwriters were not liable. The insurance policy was voided on the  ground of fraud and the principle of utmost good faith was introduced. According to Lord Mansfield the governing Principle of “good faith” is applicable to all contracts and dealings” (See carter v. Boehm (supra).

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