A Study on the Duty of Disclosure in the U.S. Insurance Law

Abstract

The duty of disclosure became a doctrine of insurance contracts in 1766 with the decision in Carter v. Boehm and was codified in the U.K. Marine Insurance Act(MIA) of 1906. Since then, insurance laws in every country have provided provisions for the duty of disclosure. The specifics of the duty of disclosure have evolved over time as the interpretation of good faith in insurance contracts and the need to address moral hazard in underwriting have changed from country to country and era to era. Today, however, the duty of disclosure continues to be debated in every country, and the United States is no exception. The United States dutifully followed English law in the early years of its founding. Over the centuries, it has become part of Anglo-American law. However, it has also developed a significant amount of its law based on the needs and unique circumstances of American society. Insurance law in the United States is no different. Currently, U.S. state laws and regulations on the duty of disclosure differ from the U.K. laws, which were amended in 2012 and 2015. In addition, insurance laws and precedents are often different in each state in the United States. British laws and regulations on the duty of disclosure have been steadily and continuously introduced in Korea. However, it seems that no article in Korea provides a detailed introduction to the laws and regulations on the duty of disclosure in the United States. Although Korean insurance law belongs to the civil law system, the laws on the duty of disclosure rely very little on the difference in the law system. Today, the U.S. insurance industry has the most influence on the global insurance industry. In addition, some insurance policies in Korea still use English insurance policies used in the United States. In light of these facts, the laws and regulations of the United States may have implications for revising or interpreting the Korean insurance law. A thorough understanding of the laws on the duty of disclosure requires a complete understanding of the unique landscape of U.S. law. It also requires a deep understanding of the various systems and doctrines that are historical deposits of more than 170 years of U.S. insurance law. In this article, it would only be possible to present some 50 states' laws and cases on the duty of disclosure. Therefore, this paper is limited to summarizing the issues common to each state. The author will provide a more detailed discussion of U.S. laws and cases by studying each issue.