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Question

Write short notes on the following :
Principle of utmost good faith.

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Solution

A contract of insurance is a contract of uberrimae fidei. It implies that a contract of insurance is found on utmost good faith. Both the insurer and the insured are under an obligation to display good faith towards each other. The insured is under the duty to make full and accurate disclosure of all the material facts voluntarily. The insurer is also under an obligation to make clear all the terms and conditions in the insurance contract to the insured. In the case of non-disclosure by the insured, the insurance contract is voidable at the discretion of the insurer.

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