Question

Explain the following term/concept:

Utmost Good Faith

Answer 1

1. All forms of insurance belong to the utmost good faith principle. This concept states that both parties to an insurance contract have a duty to fully, accurately, and totally disclose all relevant information regarding the insurance contract.
2. While the insurer is required to give full and accurate details regarding the terms and circumstances of the insurance contract, the insured is required to provide accurate and complete information regarding the subject matter of the policy.
3. The insurer may refuse to settle the claim if the insured fails to submit accurate and comprehensive information. 
4. For example, when obtaining a policy, Mr. Hari failed to disclose to the insurance company his kidney condition. Therefore, his family will not receive payment if the insurance company finds it after his death.