Insurance - Proof Required To Establish Pre-Contractual Misrepresentation/Non-Disclosure

In a recent decision, the Court of Appeal has confirmed once again that an insurer needs to produce evidence of materiality and inducement in order to avoid a policy for non-disclosure.

It is well established that an insurer needs to show both materiality and inducement to allow it to avoid an insurance contract for pre-contractual misrepresentation or non-disclosure. A matter is material if it would have influenced the mind of the hypothetical "prudent insurer". Inducement is established if the actual underwriter would not have written the risk, or would have done so on different terms, if he had been aware of the true position.

This means that to show materiality, evidence from an expert underwriter will be helpful and may be determinative. To establish inducement the key question is what would the actual underwriter have done? There have been attempts - some successful - to show inducement without calling the actual underwriter to give evidence. One example