Non-Disclosure and Misrepresentation in Nigerian Insurance Contracts

An illiterate vehicle owner asks the insurer’s agent to help fill in a proposal form. The form says nothing about the fact that another insurer has already refused him comprehensive cover. Months later his car is wrecked and the insurer refuses to pay, because of that silence. The Supreme Court agreed with the insurer, even though the omission seems to have been the agent’s own doing.¹ This is Northern Assurance Co Ltd v Idugboe, still one of the most debated insurance decisions in Nigeria, and it raises the question this article answers: what must a person tell an insurer, what happens if the truth is not told, and what has the 2025 Act changed?

The topic follows Insurable Interest in Nigerian Insurance Law and is the most examined topic in the insurance syllabus. The Nigerian Insurance Industry Reform Act 2025 (NIIRA) is the baseline, but you will see that it treats marine and non-marine insurance very differently.

1. Why insurance has a duty of disclosure

Most contracts leave each side to look after its own interest. Insurance does not, because the insurer must price a risk it cannot see. The facts that matter lie in the insured’s knowledge: how the car is driven, what the building is used for, what the applicant’s health is. Lord Mansfield explained in Carter v Boehm that the underwriter trusts the insured’s representation and assumes that nothing has been kept back to mislead him into pricing the risk as if the hidden fact did not exist.² That is why insurance is a contract of the utmost good faith, uberrimae fidei, and why each party must reveal what the other would want to know, whether asked or not.³ Nigerian courts have repeated that a contract of insurance should be one of the utmost good faith.⁴

The duty runs both ways, but it weighs most on the proposer. It lasts until the contract is concluded and applies to every kind of policy. The remedy, at common law, is that the contract is not void but voidable at the option of the aggrieved party. Avoidance operates from the start of the contract, so the policy is set aside, losses are repaid and premiums returned.⁵

2. The common law rule on non-disclosure

Non-disclosure is the failure of one party to communicate a fact that is within his actual or presumed knowledge, is not known to the other party, and would have induced the other not to contract or to ask for better terms.⁶ The insured must disclose every material fact that he actually knows or can find out by reasonable inquiry. If he fails, even innocently, the insurer may avoid.

In Bamidele v Nigeria General Insurance Co, the deceased was a labourer but described himself as a horticulturist and green grocer. The insurer had no means of checking, and the court held that failing to state his occupation accurately entitled it to avoid.⁷ In Roselodge v Castle, the conviction of a sales manager for smuggling diamonds was a material fact that should have been disclosed to the insurer of a jeweller’s stock, and no waiver arose just because the form asked no question about it.⁸ In Bufe v Turner, a warehouse owner who insured his building without mentioning that a neighbouring shop was on fire could not enforce the policy.⁹

The duty is limited by knowledge. A person cannot disclose what he does not know, as Joel v Law Union and Crown Insurance Co put it.¹⁰ In Century Insurance Co v Atuanya (No 2), the proposer said no earlier policy of his had been cancelled, not knowing that one had been. The court held that where the proposal asks only what the proposer believes, it is the honestly held belief on reasonable grounds that must be true, and that no one can be expected to disclose what he does not know.¹¹ In Akpata v African Alliance Insurance Co, a life assured who said he was in good health when he was in fact very ill was not guilty of non-disclosure, because his condition could not be detected medically at the time.¹²

Here is the tension you should present in an examination. Atuanya and Akpata protect the honest proposer. Idugboe does not. There the Supreme Court reversed a trial court that had found for the insured, holding that the failure to disclose the earlier insurer’s refusal was material and entitled the insurer to avoid, though the omission appears to have been made by the agent who helped the illiterate insured fill the form.¹³ American International Insurance Co v Dike followed it.¹⁴ The cases cannot both be read at face value. The difference seems to be what the insured actually knew: in Atuanya and Akpata the proposer did not know the fact, while in Idugboe the insured knew of the refusal, and the question was whose knowledge and whose act the omission was. That is exactly the question that section 64 of NIIRA now addresses, as section 5 below explains.

3. Materiality

A fact is material if it would influence the judgment of a prudent insurer in fixing the premium or deciding whether to take the risk at all. Akpata put the test this way: the fact must affect the risk, and if all it does is prompt inquiries that would make no difference to a reasonable insurer, it is not material.¹⁵ It is for the court to say whether a fact is capable of being material, but the decision is one of fact. NIIRA gives the same test for marine insurance and for third-party motor policies.¹⁶

Materiality is not trivial. Previous insurance, refusals, cancellations, convictions and the condition of the thing insured are the usual examples. A fact that affects the insurer’s right of subrogation can also be material, because if the insured has already given up a right against a third party the insurer’s risk is greater.¹⁷ But a misstatement that would not move the insurer is ignored. In United Nigeria Insurance Co v Salawu Karimu, a proposer wrote the names of two partners as one person; that was not material because it would not have influenced the premium or the decision to accept.¹⁸

The burden is on the insurer. It must prove both the fact and its non-disclosure. In Audu Bida v Motor and General Insurance Co, and again in Chukwurah v Royal Exchange Assurance, the insurers alleged that the car was old and not new as stated in the proposal. They failed to prove it and the insureds recovered.¹⁹ The age of the car was a material fact in Chukwurah, but the insurer had to prove the fact first.

4. What the insured need not disclose

An insured is not required to disclose what the insurer knows or ought to know, as Carter v Boehm itself made clear.²⁰ That covers facts known to the insurer, facts within its constructive knowledge, matters of common knowledge, and the practice and customs of the trade being insured. If the insurer has led the insured to believe it does not mind, it will be taken to have waived disclosure, as where it accepts premium after discovering the undisclosed fact, as in Hemmings v Sceptre Life Association.²¹ And what the insured tells the insurer’s agent acting within authority is treated as told to the insurer, as in Ogbebor v Union Insurance Officers Ltd.²²

5. Misrepresentation

Non-disclosure is silence. Misrepresentation is a false statement. In practice they overlap, because a false answer hides a fact and a missing answer can imply something false. A misrepresentation makes the contract voidable where it is substantially false, concerns information material to the insurer’s assessment, and induced the other party to contract.²³ The statement is read as a whole, and small inaccuracies do not matter, as Karimu shows.²⁴

Blank answers on a proposal form are a favourite exam topic. Leaving a question unanswered is not usually a misstatement, but it becomes one if the obvious inference is that the applicant meant the blank to say “no.” In Roberts v Avon Insurance Co, the proposer left unanswered a question about previous losses, and the court held that the inference was that there had been none, so the insurer could avoid.²⁵ Similar reasoning appears in Marcovitch v Liverpool Victoria Friendly Society.²⁶ A Nigerian trial decision, India Trading Co v Lion of Africa Insurance Co, held an unanswered question about earlier refusals fatal to the claim.²⁷ There is a respectable argument the other way: an insurer who issues a policy without querying a blank answer has arguably waived the information. The courts have not settled the point, and the decision in Roberts itself suggests the answer depends on the inference to be drawn.

6. What section 64 of NIIRA changed for non-marine insurance

The Insurance Act 2003 intervened in section 54, and section 64 of NIIRA repeats it with an addition. Four rules matter.²⁸

First, where the insurer requires a proposal or application form, it must draw it up to elicit the information it considers material, and any information not specifically requested is deemed not material. This moves non-marine insurance from “volunteer everything” towards “answer what you are asked.” If there is no question, the insurer cannot later say a fact was material.

Second, the form must be printed in easily readable letters, with a notice in a conspicuous place on the front page that an agent who assists in filling the form does so as the applicant’s agent. Third, a disclosure or representation made to an insurer’s agent acting within his authority is treated as made to the insurer. Fourth, and new in 2025, the applicant’s Bank Verification Number and National Identification Number (or Corporate Affairs Commission documents for a company) form part of the material information.

Return to Idugboe. Section 64(2) effectively writes its result into statute: the agent who helps fill the form is the applicant’s agent, so the omission is the applicant’s. What the statute adds is a warning requirement that falls on the insurer. A form without the required notice raises an arguable point that the insurer cannot rely on the deeming rule, though the Act does not say so. The scope of section 64 is also limited by its words: it applies where an insurer requires a form. For oral applications, renewals and cover notes without forms, the common law duty of disclosure still applies in full.

7. Marine insurance has a different regime

This is the part of the Act that most students will miss. Part XIV, the marine part, replaces the old duty with a modern one borrowed from English reform. Before a marine contract is made, the insured must make a “fair presentation of the risk”.²⁹ That means disclosing every material circumstance the insured knows or ought to know, or giving enough to put a prudent insurer on notice to make further inquiries; presenting it in a way that a prudent insurer would find reasonably clear and accessible; and making sure every material statement of fact is substantially correct and every statement of belief is made in good faith.³⁰

The Act also defines what the insured “knows” (the knowledge of senior management and the people responsible for arranging insurance, plus what a reasonable search would reveal) and what the insurer knows and is presumed to know, such as common knowledge and what an insurer in that field would ordinarily know.³¹ The insurer may now claim a remedy only if it shows that, but for the breach, it would not have contracted at all or would have done so only on different terms, and the Act separates deliberate or reckless breaches from the rest, placing the burden of proving deliberate or reckless conduct on the insurer.³² Most striking, section 138 abolishes the rule that a party may avoid a contract of insurance because the other did not observe the utmost good faith.³³

Two points follow. First, a Lagos importer insuring cargo now receives a more balanced regime than a trader insuring a shop against fire, because section 116(2) preserves the old rules for everything that is not marine insurance.³⁴ The 1766 rule of Carter v Boehm still governs fire, motor and life policies. A student who describes “the” Nigerian law of non-disclosure without separating marine from non-marine will get the answer wrong.

Second, there is a gap. The Act sets the conditions for a remedy but, as far as I can find, does not say what the remedies are for a qualifying breach, whether avoidance, a proportionate reduction of the claim or something else.³⁵ English law, the model for these sections, sets those out in a schedule. A Nigerian court will have to supply them, and the first decisions will matter.

8. Third parties and motor insurance

Section 64 and the old cases deal with disputes between insurer and insured. A road accident victim is in a different position. Section 90 of NIIRA requires an insurer to satisfy a judgment against its insured for liability covered by the policy even if it is entitled to avoid or has avoided the policy. The insurer escapes only if it obtained a declaration that it was entitled to avoid for non-disclosure or false representation, or avoided the policy, in an action begun before or within three months after the start of the proceedings in which the judgment was given. It must also have given the claimant notice of the grounds within seven days of starting that action.³⁶ So a road accident victim whose driver’s insurer later finds a non-disclosure has a better chance of recovery than the policyholder himself, as long as the insurer has not taken the correct steps in time.

9. Effect and remedies

For non-marine policies, the insurer who proves a material non-disclosure or misrepresentation may avoid the contract from the start, and the insured generally gets his premium back unless there was fraud, as discussed in Premiums and the Risk Factor in Nigerian Insurance Law.³⁷ The right to avoid can be lost by affirmation or waiver. The insurer who carries on collecting premium after learning the truth will find it hard to deny the policy later. Avoidance after a loss extinguishes a claim that the insured would otherwise hold as a contractual property right, which is part of why section 64 matters: it narrows the facts on which the insurer can rely.

10. Common student mistakes

• Saying the contract is void for non-disclosure. At common law it is voidable at the insurer’s option.
• Describing the duty as running one way only. It is mutual, though most cases concern the insured.
• Ignoring section 64 of NIIRA when the insurer used a proposal form.
• Missing the marine and non-marine split: sections 132 to 139 apply to marine insurance only.
• Forgetting that the insurer must prove the non-disclosure (Audu Bida, Chukwurah).
• Applying Idugboe without noting the knowledge issue that separates it from Atuanya and Akpata.
• Stating that an unanswered question is always a misrepresentation, when it depends on the inference.
• Forgetting section 90, which protects third-party accident victims against avoidance.

11. Problem question approach

Start by identifying whether the policy is marine or not. For non-marine, ask whether a proposal form was used. If yes, check whether the fact was asked for (section 64(1)), who filled the form (section 64(2) and (3)) and whether the warning notice was printed. If no form was used, apply the common law duty. Test materiality with the prudent insurer standard and ask who must prove it. Check what the insured actually knew, whether the insurer knew or waived, and whether a blank answer carries an inference. Last, state the remedy: avoidance and return of premium, or, for a third-party claimant, the effect of section 90. For marine, run through fair presentation, the knowledge rules and whether a qualifying breach exists.

12. Quick reference

Question	Answer	Authority
Effect of non-disclosure at common law?	Voidable, avoided from the start	Cornhill v Assenheim
Test of materiality?	Would influence a prudent insurer	Akpata; NIIRA s 136(3), s 139(1)
Who proves it?	The insurer	Audu Bida; Chukwurah
Must the insured disclose what he does not know?	No	Joel v Law Union; Atuanya
Information not asked for in a proposal form?	Deemed not material	NIIRA s 64(1)
Agent filling the form?	Applicant’s agent	NIIRA s 64(2)
Disclosure to insurer’s agent?	Counts as disclosure to insurer	NIIRA s 64(3); Ogbebor
Marine duty?	Fair presentation	NIIRA s 132
Avoidance for breach of utmost good faith, marine?	Abolished	NIIRA s 138
Non-marine regime preserved?	Yes	NIIRA s 116(2)
Third-party victim and avoidance?	Insurer must satisfy judgment unless timely declaration	NIIRA s 90

13. Key cases

• Carter v Boehm (1766) 3 Burr 1905: the foundation of the duty of disclosure.
• Northern Assurance Co Ltd v Idugboe (1966) 1 All NLR 88: undisclosed prior refusal entitled the insurer to avoid despite the agent’s involvement.
• Century Insurance Co v Atuanya (No 2) (1966) 2 ALR (Comm) 314: no duty to disclose what the proposer does not know.
• Akpata v African Alliance Insurance Co (1967) 3 ALR (Comm) 264: materiality test; undetectable illness is not non-disclosure.
• Bamidele v Nigeria General Insurance Co (1973) 3 UILR (Pt 4) 418: inaccurate occupation entitled insurer to avoid.
• Audu Bida v Motor and General Insurance Co (1972) NCLR 270 and Chukwurah v Royal Exchange Assurance (Nig) Ltd (1974) 4 ECSLR 319: insurer must prove non-disclosure.
• United Nigeria Insurance Co v Salawu Karimu (1969) NCLR 247: immaterial misstatement does not avoid.
• Roberts v Avon Insurance Co [1956] 2 Lloyd’s Rep 240: unanswered question may imply a negative answer.
• Hemmings v Sceptre Life Association [1905] 1 Ch 365: waiver by accepting premium after discovery.

Footnotes

1. Northern Assurance Co Ltd v Idugboe (1966) 1 All NLR 88.
2. Carter v Boehm (1766) 3 Burr 1905, 1909.
3. Re Bradley and Essex and Suffolk Accident Indemnity Society [1912] 1 KB 415, 430.
4. Irukwu v TMIB (1997) 12 NWLR (Pt 531) 113.
5. Cornhill Insurance Co v Assenheim (1937) 58 Ll L Rep 27, 31.
6. Carter v Boehm (n 2).
7. Bamidele v Nigeria General Insurance Co (1973) 3 UILR (Pt 4) 418.
8. Roselodge Ltd v Castle [1966] 2 Lloyd’s Rep 113, 127.
9. Bufe v Turner (1815) 6 Taunt 338.
10. Joel v Law Union and Crown Insurance Co [1908] 2 KB 863.
11. Century Insurance Co Ltd v Atuanya (No 2) (1966) 2 ALR (Comm) 314.
12. Akpata v African Alliance Insurance Co Ltd (1967) 3 ALR (Comm) 264.
13. Northern Assurance Co Ltd v Idugboe (n 1).
14. American International Insurance Co v Dike (1978) NCLR 408.
15. Akpata (n 10), 279 to 281.
16. Nigerian Insurance Industry Reform Act 2025, ss 102, 136(3) and 139(1).
17. Tate v Hyslop (1885) 15 QBD 368.
18. United Nigeria Insurance Co Ltd v Salawu Karimu (1969) NCLR 247, 250.
19. Audu Bida v Motor and General Insurance Co (1972) NCLR 270; Chukwurah v Royal Exchange Assurance (Nig) Ltd (1974) 4 ECSLR 319.
20. Carter v Boehm (n 2).
21. Hemmings v Sceptre Life Association [1905] 1 Ch 365.
22. Ogbebor v Union Insurance Officers Ltd (1967) ALR Comm 166.
23. Bamidele v Nigeria General Insurance Co (n 7).
24. United Nigeria Insurance Co Ltd v Salawu Karimu (n 18).
25. Roberts v Avon Insurance Co [1956] 2 Lloyd’s Rep 240, 249.
26. Marcovitch v Liverpool Victoria Friendly Society (1912) 28 TLR 188.
27. India Trading Co v Lion of Africa Insurance Co (unreported, High Court, Onitsha, 1972).
28. Nigerian Insurance Industry Reform Act 2025, s 64(1) to (4); Insurance Act, Cap I17, LFN 2004, s 54.
29. Nigerian Insurance Industry Reform Act 2025, s 132(1) to (5).
30. Nigerian Insurance Industry Reform Act 2025, s 132(1) to (5).
31. Nigerian Insurance Industry Reform Act 2025, ss 133 to 135.
32. Nigerian Insurance Industry Reform Act 2025, s 137.
33. Nigerian Insurance Industry Reform Act 2025, s 138(1) and (2).
34. Nigerian Insurance Industry Reform Act 2025, s 116(2).
35. Nigerian Insurance Industry Reform Act 2025, s 137.
36. Nigerian Insurance Industry Reform Act 2025, s 90(1), (3) and (4).
37. Nigerian Insurance Industry Reform Act 2025, s 194(3)(a).