The recent decision of the Court of Appeal in Drake Insurance v Provident Insurance [2003] highlights some of the oddities of the present state of the law relating to disclosure on the placing of insurance contracts.
In some respects the facts of the case were very unusual. The underwriting process was relatively rigid and, thus, it was possible to say what difference full disclosure would have made to the insurer. Also, the insurer had not been told of two matters, one adverse to the risk and the other favourable to the risk; knowledge of the adverse fact alone would have led to a higher premium, whereas knowledge of both would have made no difference to the terms of the policy.
