by Tyler Frederick
Uberrimae fidei, the doctrine of utmost good faith, was created by English common law nearly two-and-a-half centuries ago as a “governing principle,” which was “applicable to all contracts and dealings.” Essentially, uberrimae fidei holds the insured liable for every fact within his knowledge that is material to the risk. In its strictest form, uberrimae fidei renders insurance contracts void ab initio even if a misrepresentation or omission within a policy application was an accident or mistake.
Soon after the doctrine’s inception, American courts adopted the uberrimae fidei doctrine. Originally, uberrimae fidei was applicable to all insurance contracts. Within the last century, many countries began questioning the doctrine’s draconian nature, including the United States. In fact, the United States has clearly abrogated the uberrimae fidei doctrine in all non-marine insurance contexts. Even Great Britain, where the doctrine originated, abolished uberrimae fidei entirely in 2015, including marine insurance. Nonetheless, six United States Circuit Courts still apply this doctrine in the marine insurance context.
In all other insurance contexts, no contract may be rescinded without a showing of reliance upon the misrepresentation. Both the Second and Eighth Circuit Courts of Appeals have held that the uberrimae fidei doctrine likewise requires proof of reliance. However, in the most recent opinion on the doctrine, the First Circuit held “that the materiality of a false statement or an omission, without more, provides a sufficient ground for voiding such a policy.” In other words, “materiality” merely requires proof that a misstatement could possibly influence a prudent insurer in deciding whether to take the risk. Meanwhile, inducement “concerns the actual underwriter rather than the imaginary ‘reasonable’ or ‘prudent’ underwriter, and it is an inquiry into reliance and the causal connection between the misrepresentation or omission and the effecting of the insurance.” This post will argue that reliance is a necessary element of the uberrimae fidei doctrine.
I. Reliance Has Always Been Required
Reliance has been a fundamental element of uberrimae fidei from its inception in 1766. Lord Mansfield explained that uberrimae fidei “prevent[ed] a party from omitting or concealing facts that would induce the counterparty ‘into a bargain, from his ignorance.’” In 1906, Parliament nearly discarded reliance, but the English courts clarified that the Act of 1906 was an incomplete codification and assured that the reliance requirement remained intact. In fact, the judges unanimously agreed that actual inducement is necessary to breach duty of utmost good faith. English law upheld that reliance requirement until the doctrine’s abolishment in 2015.
Once the United States adopted the uberrimae fidei doctrine, the doctrine’s American development paralleled its English predecessor at least through the ninetieth century. Accordingly, it is clear that the Supreme Court implicitly applied the same reliance element required by English law. When the Supreme Court first adopted the uberrimae fidei doctrine, it held that uberrimae fidei voided an insurance policy when an omission or misrepresentation would “have countermanded the insurance.” Next, in Sun Mutual Insurance Company v. Ocean Insurance Company, the Court held that “[t]he concealment . . . avoids the policy if it actually intended to cover the risk for which the claim is made.” In its final opinion on the uberrimae fidei doctrine, the Court once again could not determine whether the omissions had any bearing on the insurance policy application. American courts continue to recognize the same today.
II. Second and Eighth Circuits
At least two Courts of Appeals explicitly recognize reliance as an element of uberrimae fidei. Both the Second and Eighth Circuits have held that voiding an insurance policy under uberrimae fidei required insurers to prove actual reliance on the insured’s misrepresentation or omission of a material fact. Both circuits recognized that the principles of uberrimae fidei require reliance before a policy is voided.
In Puritan Insurance Co. v. Eagle Steamship Co., S.A., the Second Circuit held that insurers must show reliance on an omission or misrepresentation to void the policy. Puritan involved an insurer seeking declaratory judgment voiding the policy after discovering that the insured omitted two prior losses when applying for insurance. At trial, the court found evidence that the insurer knew of the first loss despite the omission but sought no further information following that discovery. The trial court and Second Circuit agreed that this first loss could not possibly void the policy because of the insurer’s knowledge of that prior loss. Although the insurer did not know of the second loss, the insurer also failed to prove that knowledge of that loss would have changed the policy in any way. Accordingly, the Second Circuit affirmed the trial court’s decision to uphold the policy, holding that an insurer must show reliance on an omission to void a policy.
In St. Paul Fire & Marine v. Abhe & Scoboda, Inc., the Eighth Circuit adopted the Second Circuit’s stance on the reliance requirement. In St. Paul, the insurer sought voidance of the policy under uberrimae fidei after discovering that the insured failed to provide a survey report which included potential problems with the structural integrity of a barge—the subject of the policy. However, the insurer neither asked for the survey nor exercised their right to perform a survey itself. Instead, the new insurer, St. Paul Fire & Marine, relied on an outdated application sent to the previous insurer. Accordingly, the Eighth Circuit held that the insurers were liable because they did not rely on the omission when deciding to accept the policy. The court explained that its holding was supported by general contract law, the history of uberrimae fidei, reliance requirements in other insurance contexts, and other courts implicitly requiring reliance.
These applications parallel the recent developments both in England and in every other American insurance context. Through the Act of 2015, England renounced uberrimae fidei altogether in exchange for a more balanced approach that distributes the burden more evenly between insureds and insurers. Similarly, every other American insurance context requires an insurer to prove reliance on the omission to void the policy. As a result, the Second and Eighth Circuits’ approach is most appropriate.
III. Other Circuits
The Second and Eighth Circuits are not alone in requiring a reliance element; instead, they are simply the only two courts to distinguish reliance as its own element. In St. Paul, the Eighth Circuit recognized that other courts require reliance but blend it into materiality as “a subjective test . . . that asks whether the insurer in fact would have found the omitted information to be material.” That subjective test defines a material fact as “one that the insurer relied upon.” For years, scholars have recognized the same. According to Thomas Schoenbaum, “[v]irtually all the American admiralty cases require inducement, but the opinions often do not clearly distinguish between the materiality and inducement issues.”
In fact, decisions of the Ninth and Eleventh Circuits demonstrate this improper conflation. These jurisdictions required insurers to prove that they would not have issued the policies, or that the premiums would have differed, had they known of the omission or misrepresentation. In other words, the insurers must prove that they relied on the misrepresentation to void the policy.
In Inlet Fisheries, the insurer sought to void the pollution insurance policy after discovering that the insured responded “none” to the “pollution loss history” section of the policy application despite having multiple, ongoing pollution incidents at that time. In deciding whether the omission was material, the court noted that “[a] non-disclosed fact is material if it would have affected the insurer’s decision to insure at all or at a particular premium.” The court held that uberrimae fidei applied and voided the policy, finding “overwhelming and unrefuted evidence that any of these undisclosed facts would have affected [the insurer’s] decision to offer the policy were it known.” This subjective focus on the evidence presented and comparing it to the actual insurer’s decisions epitomizes the necessity of reliance.
In its most recent decision on the topic, the Eleventh Circuit also required inducement in its uberrimae fidei analysis. In I.T.N Consolidators Consolidators v. Northern Marine Underwriters, Ltd., the insurer sought to void the policy under uberrimae fidei despite knowing of the loss prior to accepting the policy. The court rejected that argument, holding that uberrimae fidei did not apply. It explained, “Because all parties knew of the loss here, a misrepresentation that no known loss had occurred could not have led [the insurer] to rely on that statement and would in no way constitute a material misrepresentation in breach of uberrimae fidei.” Essentially, because the insurer knew of the omitted loss before issuing the policy, it could not have possibly relied on that omission; thus, uberrimae fidei could not possibly void the policy.
As Schoenbaum explained, inducement differs from materiality by focusing on the actual underwriter and the causal connection between reliance on the omission and the omission’s effect on issuing the policy. Both cases exemplify Schoenbaum’s observation. Each was decided by considering the evidence particular to the circumstance at hand. The decisions turned on findings of an insurer’s knowledge and the evidence that that specific insurer’s decision would have differed had they known of the omissions. The courts did not stop their inquiries immediately after finding an omission occurred; instead, they further inquired whether those omissions altered the decisions actually made by the insurers.
IV. The QBE Seguros Opinion
Only one court has expressly denounced the reliance requirement. In QBE Seguros, the insured admittedly omitted previous accidents from its insurance application, and the insurer filed suit to void the policy as a result. The insured first argued that the changes in English law and other areas of insurance law supported a departure from the uberrimae fidei doctrine in maritime law. Despite acknowledging multiple Supreme Court cases that harped on the importance of maintaining uniformity between American and English maritime laws, the First Circuit found “sound reasons to retain the challenged doctrine.” The court explained, “Although the availability of information has improved dramatically in recent times, a marine insurer and its insured do not have equal access to the information needed to make underwriting decisions and to set premiums.” It further explained that the need for marine insurance “at a moment’s notice” coupled with this “asymmetry in the availability of information” justified upholding the doctrine. However, marine insurers are no more disadvantaged today than car, home, or life insurers. Moreover, car insurance is just as much needed at a moment’s notice as marine insurance is, yet car insurance contracts no longer apply uberrimae fidei.
Next, the insured argued that uberrimae fidei could not apply because the insurer did not rely on the omissions when accepting the policy. Again, the First Circuit declined the insured’s argument. In support of its decision, the First Circuit improperly found that the majority of courts do not require reliance. In actuality, a 4–3 majority of courts require reliance, assuming arguendo that the Third and Ninth Circuits agree with the First Circuit view. As mentioned, the Second and Eighth Circuits expressly held reliance was required. The Fifth Circuit also required reliance by applying state law, holding that the uberrimae fidei doctrine was not entrenched in maritime law. Finally, in its most recent opinion, the Eleventh Circuit also dismissed an uberrimae fidei argument because the insurer did not rely on the omission. This is reinforced by both the Eighth Circuit and Schoenbaum, as each recognized that most opinions have implicitly required reliance long before the Second and Eighth Circuits explicitly recognized it.
Reliance is necessary in the uberrimae fidei analysis. The case law supports requiring a causal connection between inducement and issuing the policy. According to Thomas Schoenbaum, “The causative link furnished by the inducement requirement is salutary. . . . [I]t would be unjust if the courts [do not] require any causal link between the misstatement and the making of the contract.” This causal connection requirement is engrained within the history of uberrimae fidei. As mentioned, the British courts always required a causal connection up until the doctrine’s death through the Act of 2015. Similarly, the Supreme Court’s uberrimae fidei decisions often turn on whether the omission would have altered—was causally connected to—the insurers’ decisions.
In QBE, the First Circuit argued that the “asymmetry in the availability of information” between insureds and insurers unfairly disadvantages insurers and necessitates the strict materiality standard it applied. While that justification may have been true in the ninetieth and twentieth centuries, that ship has sailed. The advancements in technology within the last century have undoubtedly abridged that gap through computerized systems that now assist insurers with calculating risks and premiums.
Instead of remedying disadvantages, applying uberrimae fidei without requiring a causal connection will unfairly penalize the individual policy holders while giving a windfall to insurance companies who will collect premiums risk free. The very reason for seeking insurance is for protection of valuables whose loss the owner cannot financially cover but is only a drop in the bucket for the insurer. Without requiring reliance, insureds will continue to pay premiums until a loss occurs at which time their insurer can deny coverage because of an inconsequential mistake. Consequently, the reliance requirement is necessary.
 Carter v. Boehm (1766) 97 Eng. Rep. 1162, 1164 (KB).
 2 Thomas J. Schoenbaum, Admiralty and Maritime Law § 19:14 (6th ed. 2018).
 McLanahan v. Universal Ins. Co., 26 U.S. 170 (1828).
 See id. at 185 (noting “the contract of insurance” is “a contract of uberrimae fidei”); Sun Mut. Ins. Co. v. Ocean Ins. Co., 107 U.S. 485 (1883) (applying general insurance law); Phx. Mut. Life Ins. Co. v. Raddin, 120 U.S. 183 (1887) (applying good faith requirement to life insurance policy).
 Thomas J. Schoenbaum, The Duty of Utmost Good Faith in Marine Insurance Law: A comparative Analysis of American and English Law, 29 J. Mar. L. & Com. 1, 1 n.2 (1998) [hereinafter Schoenbaum, The Duty of Utmost Good Faith].
 QBE Seguros v. Morales-Vazquez, 986 F.3d 1, 7–8 (2d Cir. 2021) (noting “uberrimae fidei has been scuttled in other areas of insurance law”).
 See Insurance Act 2015, c. 4., § 14 (U.K.) (“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.”)
 See, e.g., QBE Seguros, 986 F.3d 1; Puritan Ins. Co. v. Eagle Steamship Co., S.A., 779 F.2d 866 (2d Cir. 1985); AGF Marine Aviation & Trans. v. Cassin, 544 F.3d 255 (3d Cir. 2008); St. Paul Fire & Marine Ins. Co. v. Abhe & Svoboda, Inc., 798 F.3d 715 (8th Cir. 2015); Certain Underwriters at Lloyd’s v. Inlet Fisheris Inc., 518 F.3d 645 (9th Cir. 2008); HIH Marine Servs., Inc. v. Fraser, 211 F.3d 1359 (11th Cir. 2000).
 Restatement (Second) Of Contracts § 164 (Am. L. Inst. 1981).
 See Puritan Ins. Co., 779 F.2d 866; Inlet Fisheries, 518 F.3d 645.
 QBE Seguros, 986 F.3d at 8.
 Id. at 11.
 Schoenbaum, supra note 2, § 19:14.
 It is worth noting that “reliance” and “inducement” are used interchangeably by courts in this context.
 See Carter v. Boehm (1766) 97 Eng. Rep. 1162, 1164 (KB).
 QBE Seguros, 986 F.3d at 4–5 (emphasis added) (quoting Carter, 97 Eng. Rep. at 1164).
 See Marine Ins. Act 1906, 6 Edw. 7 c. 41, § 17 (U.K.).
 See Pan Atl. Ins. Co. Ltd. v. Pine Top Ins. Co. Ltd.  1 AC 501 (HL); Assicurazioni Generali SpA v. Arab Ins. Grp. (B.S.C.)  EWCA (Civ) 1642 .
 Pine Top, 1 AC 501.
 Insurance Act 2015, c. 4, § 14 (U.K.).
 QBE Seguros, 986 F.3d at 5.
 McLanahan v. Universal Ins. Co., 26 U.S. 170, 185 (1828).
 Sun Mut. Ins. Co. v. Ocean Ins. Co., 107 U.S. 485 (1883).
 Stipich v. Metro. Life Ins. Co., 277 U.S. 311 (1928).
 See, e.g., Puritan Ins. Co. v. Eagle Steamship Co., S.A., 779 F.2d 866 (2d Cir. 1985); St. Paul Fire & Marine Ins. Co. v. Abhe & Scoboda, Inc., 798 F.3d 715 (8th Cir. 2015).
 Puritan, 779 F.2d at 871.
 Id. at 868.
 Id. at 870.
 Id. at 872.
 Id. The Second Circuit has repeatedly upheld the reliance requirement. See, e.g., Atl. Specialty Ins. Co. v. Coastal Env’t Grp. Inc., 945 F.3d 53 (2d Cir. 2019); Fireman’s Fund Ins. Co. v. Great Am. Ins. Co. of N.Y., 822 F.3d 620 (2d Cir. 2016); Fed. Ins. Co. v. Keybank N.A., 340 F. App’x 5 (2d Cir. 2009).
 St. Paul Fire & Marine Ins. Co. v. Abhe & Scoboda, Inc., 798 F.3d 715 (8th Cir. 2015).
 Id. at 718.
 Id. at 720.
 Schoenbaum, supra note 2, § 19:14.
 QBE Seguros v. Morales-Vazquez, 986 F.3d 1, 7–8 (1st Cir. 2021).
 St. Paul Fire & Marine Ins. Co., 798 F.3d at 721.
 Id. (emphasis added).
 See, e.g., Michael F. Sturley & Matthew H. Ammerman, Recent Developments in Admiralty and Maritime Law at the National Level and in the Fifth and Eleventh Circuits, 46 Tul. Mar. L.J. 531, 562 (2022) (stating that QBE refusing reliance as an element stands in stark contrast to “the rest of the legal world”); Schoenbaum, supra note 2, § 19:14; Schoenbaum, The Duty of Utmost Good Faith, supra note 6.
 Schoenbaum, supra note 2, § 19:14; Schoenbaum, The Duty of Utmost Good Faith, supra note 6, at 27.
 See, e.g., Certain Underwriters at Lloyds, London v. Inlet Fisheries Inc., 518 F.3d 645 (9th Cir. 2008); I.T.N. Consolidators, Inc. v. N. Marine Underwriters Ltd., 464 F. App’x 788 (11th Cir. 2012).
 See, e.g., Inlet Fisheries, 518 F.3d 645; I.T.N. Consolidators, 464 F. App’x 788.
 Inlet Fisheries, 518 F.3d at 648.
 Id. at 655 (quoting N.Y. Mar. & Gen. Ins. Co. v. Tradeline, 266 F.3d 112, 123 (2d Cir. 2001)).
 See I.T.N. Consolidators, 464 F. App’x 788.
 Id. at 794.
 Id. (emphasis added).
 Schoenbaum, supra note 2, § 19:14.
 See Certain Underwriters at Lloyds, London v. Inlet Fisheries Inc., 518 F.3d 645 (9th Cir. 2008); I.T.N. Consolidators, 464 F. App’x 788.
 See QBE Seguros v. Morales-Vazquez, 986 F.3d 1 (2d Cir. 2021).
 Id. at 3.
 Id. at 6.
 Id. at 7.
 Id. at 8.
 Id. at 9.
 Compare Puritan Ins. Co. v. Eagle Steamship Co., S.A., 779 F.2d 866 (2d Cir. 1985); Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882 (5th Cir. 1991); St. Paul Fire & Marine Ins. Co. v. Abhe & Scoboda, Inc., 798 F.3d 715 (8th Cir. 2015); and I.T.N. Consolidators, Inc. v. N. Marine Underwriters Ltd., 464 F. App’x 788 (11th Cir. 2012), with QBE Seguros, 986 F.3d 1; AGF Marine Aviation & Trans. V. Cassin, 544 F.3d 255 (3d Cir. 2008); and Certain Underwriters at Lloyd’s v. Inlet Fisheries Inc., 518 F.3d 645 (9th Cir. 2008).
 See discussion supra Part II.
 See Anh Thi Kieu, 927 F.2d 882.
 See I.T.N. Consolidators, 464 F. App’x 788.
 See St. Paul Fire & Marine Ins. Co., 798 F.3d 715; Schoenbaum, The Duty of Utmost Good Faith, supra note 6.
 Schoenbaum, The Duty of Utmost Good Faith, supra note 6.
 See discussion supra Part I.
 See discussion supra Part I.
 QBE Seguros v. Morales-Vazquez, 986 F.3d 1, 8 (2d Cir. 2021).