Carlos A. Morales-Vázquez v. Óptima Seguros

An applicant for marine insurance has an obligation to disclose all facts that are material to the insurer’s risk. Under the strict version of the uberrimae fidei (“utmost good faith”) doctrine applied by the court below, an insurer may declare an insurance policy void after a loss occurs (and thus avoid paying the claim) if the applicant’s disclosure was materially inaccurate or any material fact is omitted — even if the mistake or non-disclosure was entirely innocent, had no connection to the loss suffered, and was not relied upon by the insurer when issuing the policy. The question presented is: Does the traditional doctrine of uberrimae fidei continue to apply in its strict form (as held by the First Circuit in the decision below and also by the Third, Ninth, and Eleventh Circuits), or is the doctrine limited to cases in which the insurer relied on a mistake or omission when issuing the policy (as held by the Second and Eighth Circuits), or is the traditional doctrine no longer part of federal maritime law (as held by the Fifth Circuit), or should the doctrine be modified to limit an insurer’s ability to avoid the policy (which would restore uniformity with the law in England)?