The central doctrines of English marine insurance law were formulated centuries ago and were more or less settled by the end of the 18th century thus allowing for their codification in the Marine Insurance Act 1906 (UK). In particular the law relating to non-disclosure was authoritatively formulated by Lord Mansfield in 1766 in Carter v. Boehm where his Lordship said:-
• 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 underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge, to mislead the underwriter into a belief that the circumstance does not exist, and to induce him to estimate the risque, as if it did not exist.
• The keeping back such circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention; yet still the underwriter is deceived, and the policy is void; because the risque run is really different from the risque understood and intended to be run, at the time of the agreement.
• The policy would equally be void, against the underwriter, if he concealed; as, if he insured a ship on her voyage, which he privately knew to be arrived; and an action would lie to recover the premium.
For more than 200 years it has been the case in English law that if an assured fails to disclose a "material circumstance" to the insurer, the insurer may avoid the contract of insurance. The English position has been followed in Australia, New Zealand and Canada and also in the United States. ..............................