Case law summary · Reviewed by Amy Price, Account Executive · Last reviewed
The case in which Lord Mansfield set out the principle that insurance contracts are contracts of the utmost good faith and that the insured must disclose every material fact within his knowledge.
George Carter was Governor of Fort Marlborough, an English East India Company settlement on the west coast of the island of Sumatra. The fort was constructed to defend the Company’s commercial interests against native attack, not to withstand assault by a European power equipped with modern artillery.
Carter took out a policy of insurance with the London underwriter Charles Boehm covering loss of the fort to a foreign enemy during the period 16 October 1759 to 16 October 1760. In April 1760 the fort was indeed taken, by a French naval squadron under the command of Comte d’Estaing.
When Carter (acting through his brother Roger Carter in London) claimed under the policy, the underwriter refused payment. Boehm argued that Carter had failed to disclose material facts known to him at the time the policy was placed: in particular, that the fort was weak, ill-equipped, vulnerable to European attack, and that intelligence had been received from the Company’s officers in the East Indies suggesting that the French were likely to attempt an attack on Company settlements. Carter, it was said, had himself sent letters to the Company in London setting out these very concerns shortly before the insurance was effected.
The matter came on for trial before Lord Mansfield, Chief Justice of the Court of King’s Bench, sitting with a special jury. The jury returned a verdict for the insured Carter. Boehm moved for a new trial on the ground that the verdict was against the evidence and that material concealment had been made out. Lord Mansfield delivered the judgment of the court refusing the application and upholding the verdict, but in doing so set out at length the legal principles which governed the duty of disclosure.
Two questions fell for determination. First, what was the nature and extent of the insured’s duty of disclosure to the underwriter at the time of placement? Second, on the particular facts, had Carter concealed any material circumstance such that the policy ought to be avoided?
The first question was of constitutional importance for the emerging law of marine and political-risks insurance. The second was a question of mixed fact and law: whether intelligence as to political and military matters in the East Indies, available to Carter but not to Boehm in London, had been material and had been culpably withheld.
The Court of King’s Bench upheld the jury verdict in favour of Carter. On the facts, Lord Mansfield found that the underwriter Boehm, sitting in London, was in no worse position than Carter to know the general state of European hostilities or to make his own enquiries as to the prospect of French naval activity in the East Indies. The specific intelligence in Carter’s possession was not, in the court’s view, such as had to be communicated.
In the course of his judgment, however, Lord Mansfield laid down a far broader proposition:
“Insurance is a contract upon speculation. The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only: the under-writer trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge, to mislead the under-writer into a belief that the circumstance does not exist… Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain, from his ignorance of that fact, and his believing the contrary.”
The duty, in other words, ran both ways and was rooted in the asymmetry of information characteristic of insurance contracting.
A contract of insurance is one of the utmost good faith (uberrimae fidei). At the placement stage each party, but in practice principally the proposer, owes the other a duty to disclose every circumstance within his knowledge which is material to the risk being insured. Material circumstances are those which would influence the judgement of a prudent underwriter in deciding whether to accept the risk and on what terms. The remedy for breach is avoidance of the contract ab initio.
The duty is, however, qualified by the principle that an insured need not disclose what the underwriter knows or ought in the ordinary course of his business to know, nor matters of public notoriety, nor circumstances as to which enquiry has been waived.
Carter v Boehm is the seminal authority on the duty of pre-contractual disclosure in English insurance law. Its rationale was codified, in respect of marine insurance, in sections 17 to 20 of the Marine Insurance Act 1906, and was extended by analogy to non-marine business throughout the twentieth century.
The case retains importance in modern practice notwithstanding the substantial reforms effected by the Consumer Insurance (Disclosure and Representations) Act 2012 and the Insurance Act 2015. Section 14 of the 2015 Act abolished the remedy of avoidance for innocent or negligent breach of the duty of disclosure as between commercial parties, replacing it with a regime of proportionate remedies. But the underlying duty itself — recast as the duty of fair presentation under section 3 of the Insurance Act 2015 — is recognisably descended from the principle stated by Lord Mansfield. Modern courts continue to cite Carter v Boehm when explaining why the law imposes disclosure obligations on parties to insurance contracts.
For brokers, the case remains the historical anchor for the fact-find conversation and the placing submission. For insureds it is a reminder that the duty to speak up about material facts is as old as English insurance law itself.
Author: Matt Bartlett, Director, Apex Insurance Brokers Ltd. Authorised and regulated by the Financial Conduct Authority (FRN 724952). Company registration 07014570 (England & Wales). This article is general information, not legal advice. Last reviewed: June 2026.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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