Utmost Good Faith In Insurance Contracts

In a judgement presided by Mr. Justice Toni Abela, in the names Knightsbridge Developments Limited vs Citadel Insurance plc, the Civil Court, First Hall held that the principle of utmost good faith in insurance contracts applies not only at the moment of conclusion of the contract but also throughout the course of the performance of such contract.

The plaintiff company was planning to build a block of nineteen apartments with garages, a semi-basement car park and a cafeteria in St. Paul's Bay, Malta. The plaintiff therefore obtained a Contractors All Risk Insurance Policy in its favour with the defendant company against any risks which such construction may have presented.

Before the commencement of the policy in question, the plaintiff company's architect had outlined in his Works Method Statement that the underlying terrain of the property in question was topographically and geologically unstable due to stiff boulder clay foundations. For this reason, he had