The Marine Rule

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In some states, even if the false statements made in the application were not warranties but were merely misrepresentations or concealments (whether innocent or intentional), grounds exist for rescission. Fraud need not be proved; this is called the Marine Rule.

In Gates v. Madison County Mut. Ins. Co. (5 N.Y. 469, 55 Am.Dec. 360, a “marine rule imposes on the insured, although no inquiry be made, to disclose every fact material to the risk, within his knowledge.” In other words, an applicant for marine insurance must state all material facts which are known to him and unknown to the insurer (Alexander, Ramsey Kerr v. National Union Fire Ins. Co., 104 F.2d 1006, 1008).

The Supreme Court of Rhode Island, applying the Marine Rule in Guardiana v. Alfred E. Tillinghast, 1986 RI 2219 (1986), found there was no need to prove fraud, even if pleaded, where a material misrepresentation is sufficient to rescind the policy.