Insurance law is, at its core, a law of relationships. Whether land-based or maritime, every policy rests on an expectation of honesty, transparency, and fairness. Yet the way the law defines good faith—and the consequences for bad faith—differs markedly depending on the environment in which a policy operates, a distinction that has real implications for insurers navigating multiple lines of coverage.
Property insurance, particularly residential, operates in a highly regulated environment built to protect consumers. Maritime insurance, by contrast, is grounded in centuries-old federal doctrine that places the burden of good faith squarely on the insured. These distinct frameworks create opposite approaches to similar concepts, raising meaningful questions about how good faith and bad faith function across the broader insurance landscape.
Understanding how good faith operates differently across insurance lines is more than an academic exercise. Insurers, underwriters, claims professionals, and counsel routinely navigate multiple regulatory and doctrinal frameworks. When standards from one context are assumed to apply universally, the result is often misplaced expectations and unnecessary exposure. Recognizing that bad faith is a function of structure—not simply conduct—helps insurers align their processes with the legal environment governing each risk.
Why Maritime Insurance Embraced Uberrimae Fidei and Property Insurance Did Not
The divergence between maritime and property insurance doctrines is not accidental. It reflects the different commercial realities each system was built to serve.
Marine insurers developed in an era when voyages were long, perilous, and largely unknowable to underwriters at the time a policy was placed. Ships could be months away, communication was slow or nonexistent, and the insured often possessed information about the vessel, cargo, route, and crew that the insurer could not independently verify. To address this imbalance, maritime law adopted the doctrine of uberrimae fidei—the utmost good faith—placing an affirmative duty on the insured to disclose all material facts, whether or not specifically requested.
That doctrine became embedded in federal maritime law, reinforced by the broader admiralty goal of promoting uniformity and protecting maritime commerce. Predictability and trust were essential to sustaining international shipping markets, and uberrimae fidei functioned as a structural safeguard against undisclosed risk in a setting where post-loss discovery could be impractical or impossible.
Property insurance evolved along a different path. As land-based risks became more localized and more easily inspected, insurers developed underwriting tools that reduced informational asymmetry. Physical inspections, standardized applications, public records, and evolving claims practices allowed insurers to assess risk directly. At the same time, property insurance—particularly residential property insurance—became increasingly regulated at the state level, with a growing emphasis on consumer protection and claims-handling standards.
In that environment, the law shifted away from placing a heightened disclosure burden on insureds and instead focused on regulating insurer conduct after a loss. Doctrines of good faith and statutory bad-faith remedies emerged not as a rejection of honesty or disclosure, but as a reflection of the belief that insurers were better positioned to investigate, evaluate, and manage risk once coverage was bound.
The result is two systems grounded in good faith, but expressed differently. Maritime insurance relies on disclosure at the front end to preserve commercial certainty across jurisdictions. Property insurance relies on claims-handling obligations at the back end to ensure fairness in a highly regulated domestic market.
Understanding that historical context helps explain why uberrimae fidei persists in maritime insurance while property insurance has developed its own framework—one that addresses good faith not so much through pre-loss disclosure duties, but more so through post-loss “bad-faith” accountability.
The Modern Property Insurance Landscape: Statutory Bad Faith and Consumer Protection
Property insurance, especially in states like Florida, is defined by extensive statutory regulation. The assumption underlying this system is that residential policyholders are everyday consumers who need legislative guardrails to ensure fairness. Bad faith statutes therefore focus on an insurer’s conduct: whether it investigated thoroughly, communicated promptly, and acted reasonably under the circumstances.
Commercial property is more varied. Some insureds are sophisticated businesses; others are small operations with limited resources. Despite these differences, the legal standards governing claim handling generally apply uniformly. This uniformity serves an important interest: predictable compliance obligations for insurers who write policies across large markets.
Maritime Insurance: A Different Vision of Good Faith
Maritime insurance approaches good faith from the opposite direction. Its guiding principle requires the insured to disclose all material facts voluntarily. The obligation is affirmative, stringent, and historically rooted in the realities of marine commerce. The doctrine was never intended as a penalty but rather a foundation. In other words, uberrimae fidei assumes that truth is the safest harbor.
Even though today’s maritime insureds range from global shipping companies to recreational boaters, the doctrine continues to promote two essential values: uniformity across jurisdictions and underwriting stability in a specialized global market. This is why maritime law remains federal and deeply resistant to fragmentation. While the sea may be unpredictable, the law governing it should not be.
The Dichotomy: Two Worlds, Two Visions of Good Faith
The contrast between these regimes is striking. Property insurance law places the burden of good faith largely on insurers, with statutory remedies addressing improper claim handling. Maritime insurance law places the burden of good faith on the insured, preserving a longstanding doctrine designed to support uniformity and commercial reliability. The distinction in its simplest form is that in property insurance, the law protects the policyholder, while in maritime insurance, the law protects the market.
This alone provides fertile ground for analysis in the context of bad faith, because it demonstrates how two branches of insurance law can treat the same foundational terms of good faith and bad faith in almost opposite ways, yet both achieve stability within their domains. At a philosophical level, two branches of insurance law, divided by centuries, converged on one point, that trust is the currency of risk.
The Role of Sophistication: Why These Systems Persist
Historically, maritime insureds were commercial shipping entities negotiating policies at arm’s length. Today, many vessel owners are ordinary individuals, yet the doctrine remains unchanged. Meanwhile, property insurance—especially residential property—still operates under the assumption that consumers require protective statutes.
This contrast raises interesting questions for practitioners. The point is not that maritime law should become more like property law, or that property law should relax consumer protections; rather, the point is understanding why these frameworks continue to make sense. Namely, maritime insurance depends on uniformity and risk disclosure, while property insurance depends on state-level consumer protections. The true tension in insurance law is not between good faith and bad faith, but between protection and predictability. These two values coexist, but they operate differently depending on the arena.
Bringing It Back to Bad Faith: Knowing Your Market
So where does this comparison leave us? It demonstrates that bad faith is not a universal concept, even within insurance law. Instead, bad faith reflects the values, pressures, and histories of the system in which it operates. This dichotomy highlights why insurers in different practice areas face different obligations—and why those obligations make sense in context. It is less about changing doctrine and more about understanding doctrine and applying it appropriately.
For insurers, the takeaway is not simply that the rules differ but that the source of the duty differs, and that difference should shape how decisions are made every day. Bad faith is not a universal doctrine that floats above all insurance lines. It is a product of structure: who holds the information, who controls the process, and what the law expects from each party in that environment.
Understanding these structural differences is what allows an insurer, broker, underwriter, or claims professional to calibrate their actions to the correct legal standard. In property insurance, this means recognizing that claims handling is the center of gravity, and that transparency, documentation, and reasonableness guide one’s steps. In maritime insurance, it means appreciating that underwriting and disclosure are the anchors, and that evaluating what the insured knew and what they failed to reveal, is often the starting point, not an afterthought. Property and maritime insurance may seem miles or even oceans apart, but both are ultimately anchored in the same truth. The measure of an insurer’s duty is reasonableness, not perfection. Whether you operate on land or at sea, recognizing which framework you are in, and why it operates as it does, is what allows you to navigate it effectively.
