Utmost good faith

Category: Claims and policy principles · Reviewed by the Apex broking team · Last reviewed 2026-08-22 · ~5 min read

The old position

Section 17 of the Marine Insurance Act 1906 originally read that a contract of marine insurance is a contract based upon the utmost good faith, and that if the utmost good faith be not observed by either party, the contract may be avoided by the other party. The principle itself is far older, having been articulated in the eighteenth century in Carter v Boehm, and it was applied well beyond marine insurance as a general principle of English insurance law. Its practical expression was the pre-contract duty of disclosure, breach of which allowed the insurer to avoid the contract from inception, return the premium and treat the policy as if it had never existed — a single, blunt remedy regardless of how innocent the failure had been.

What section 14 changed

Section 14(1) of the Insurance Act 2015 provides that any rule of law permitting a party to a contract of insurance to avoid the contract on the ground that the utmost good faith has not been observed by the other party is abolished.

Section 14(2) provides that any rule of law to the effect that a contract of insurance is a contract based on the utmost good faith is modified to the extent required by the provisions of the Act and of the Consumer Insurance (Disclosure and Representations) Act 2012.

Section 14(3) does the consequential tidying: in section 17 of the Marine Insurance Act 1906 the words from “, and” to the end are omitted, and the application of the section as so amended is subject to the provisions of the 2015 Act and CIDRA. Section 14(4) omits section 2(5) of CIDRA. The amendments took effect on 12 August 2016. Section 17 of the 1906 Act now reads simply that a contract of marine insurance is a contract based upon the utmost good faith — a statement of principle with no remedy attached to it.

What that means in practice

Utmost good faith survives as an interpretative principle. It is no longer a free-standing cause of action or a route to avoidance. Where a party wants to attack a contract, it must find its remedy in the statutory schemes.

For a commercial insured, that means the duty of fair presentation in Part 2 of the Insurance Act 2015 and the proportionate remedies in Schedule 1: avoidance with return of premium only where the insurer would not have written the risk at all, imposition of the different terms it would have applied, or proportionate reduction of the claim; avoidance with retention of premium only for a deliberate or reckless breach. For a consumer, it means the duty to take reasonable care not to make a misrepresentation under CIDRA and the graduated Schedule 1 remedies of that Act, with avoidance and retention of premium reserved for the deliberate or reckless case.

After the contract is made, the position is governed by the specific rules rather than by a general good faith duty. Fraudulent claims are dealt with by section 12 of the Insurance Act 2015, which gives a forward-looking remedy from the time of the fraudulent act rather than avoidance from inception.

Why so much published material is wrong

A great deal of insurance content online still describes utmost good faith as a duty whose breach allows an insurer to avoid the policy. That was accurate before 12 August 2016 and has not been true since. Older textbooks, glossaries and training material that predate the Act are still in circulation and are still being copied. If a source states that breach of the duty of utmost good faith entitles an insurer to avoid, it is describing the pre-2016 law. The date to check against is 12 August 2016 for the Insurance Act 2015 and 6 April 2013 for CIDRA.

What has not changed

Honesty still matters, and so does completeness. The obligations that replaced the old duty are demanding in their own right: a commercial insured must make a fair presentation, disclosing every material circumstance it knows or ought to know, in a manner reasonably clear and accessible to a prudent insurer. What has changed is the consequence of getting it wrong, which is now graduated rather than absolute. The old maxim also continues to shape how courts read insurance contracts and how regulators frame conduct expectations.

Frequently asked questions

Can an insurer still avoid a policy for breach of utmost good faith?

No. Section 14(1) of the Insurance Act 2015 abolished the rule of law permitting avoidance on that ground, with effect from 12 August 2016. Avoidance is now available only where the Insurance Act 2015 or CIDRA 2012 provides for it.

Is utmost good faith still part of English insurance law?

Yes, as a principle. Section 17 of the Marine Insurance Act 1906 still states that a contract of marine insurance is a contract based upon the utmost good faith, but the words providing for avoidance were deleted by section 14(3)(a) of the Insurance Act 2015.

What replaced the old duty of disclosure?

For commercial insureds, the duty of fair presentation of the risk under Part 2 of the Insurance Act 2015. For consumers, the duty to take reasonable care not to make a misrepresentation under section 2(2) of CIDRA 2012.

Related entries

• Section 14 of the Insurance Act 2015
• Fair presentation of the risk
• Utmost good faith in professional indemnity
• CIDRA 2012
• Marine Insurance Act 1906
• Commercial insurance UK

This entry is part of the Apex Insurance Wiki. It states the position as at August 2026. Last reviewed 2026-08-22. Next review: 2027-02-22. It is general insurance information, not legal advice, and it is not regulated advice on a specific policy.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.