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A Study on the Co-relationship between the Duty of Utmost Good Faith and the Amendment of an Insurance Contract

  • DONG-A LAW REVIEW
  • 2019, (85), pp.139-168
  • DOI : 10.31839/DALR.2019.11.85.139
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law
  • Received : October 29, 2019
  • Accepted : November 22, 2019
  • Published : November 30, 2019

JUNG-WON LEE 1

1부산대학교

Accredited

ABSTRACT

In principle of good faith, where knowledge or information relating to an insurance contract is ubiquitous on either party, it is necessary to ensure that the contracting party holding such risk provides the other party with sincere and honest cooperation. Thus, there is a close correlation between the duty of utmost good faith in insurance contracts and the obligation to notify under insurance contract law. In the UK, in principle, disclosure of material circumstances shall be made by the assured until the conclusion of the insurance contract, unless otherwise specified. However, the court finds that the duty of utmost good faith in an insurance contract continues after the conclusion of the contract. Although the continuation of the duty of utmost good faith is recognized after the conclusion of the insurance contract, the scope of recognition of that duty must be strictly limited. On the other hand, if the decision of the insurer in relation to the insurance contract is necessary even after the conclusion of the insurance contract, the duty of utmost good faith imposed on the insured shall be revived at any time. The insured is then obliged to faithfully provide the material circumstances necessary for the decision of the insurer. Accordingly, the UK court has inferred and applied Section 18 (2) of ‘the Marine Insurance Act 1906 (hereunder, MIA)’ on the determination of material circumstances subject to the insured's post-contractual duty of disclosure under the insurance contract. However, upon acknowledging the basis for the assured's pre- and post- contractual duty of disclosure is separated, the assured's post-contractual duty of disclosure is not consistent with the same content and intensity as the assured's pre-contractual duty of disclosure. Therefore, the assured's post-contractual duty of disclosure is limited to those required under circumstances changed after the conclusion of the insurance contract. In this case, the Korean Supreme Court ruled that “under the MIA, when amending the contents of an existing contract while the insurance contract continues, the assurd shall disclose only for matters relating to that amendment, not all material circumstances, such as the duty set forth in S. 18, shall be disclosed.” It means that the Korean Supreme Court ruling confirmed that under the MIA, the basis for recognizing the assured's pre- and post- contractual duty of disclose is separate, and that the only important matters to be notified by the assured after the conclusion of the insurance contract are those that are ‘relevant’ and ‘material circumstances’ which are ‘relevant’ to the matter in question after the conclusion of the insurance contract.

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