Scottish Insurance Law Case

In Scots Law, a contract of insurance is considered a contract uberrimae fidei i.e. “of the utmost good faith” and those taking out insurance have a duty to disclose all material facts:Cuthbertson v Friends Provident Life Office 2006 SLT 567 C took out an insurance policy in 1994. It was called a “Homebuyers Plus Policy” and included life assurance and “serious illness and disability benefit”. C also took out an Income Protection Policy which would pay a weekly amount in the event that she would be unable to work due to sickness or accident. In 1996 she was diagnosed with multiple sclerosis and submitted her claim under both policies in 1999. Her claim was rejected on grounds that she had failed to disclose a material fact at the time of taking out the policies. Prior to doing so, she had attended her general practitioner for a painful left eye and otalgia in her left ear. She did not disclose this or three subsequent visits to her doctor on her proposal form. The Court of Session held that the test to be applied in this case was that laid down in Foster v Foster (1873) 11 M 351 i.e. would a reasonable person with C’s knowledge have appreciated that these consultation with the doctor would have been considered as material facts by a prudent insurer. The court’s answer was “no”. C was entitled to the insurance benefits.

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