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Question
Which Principle of Insurance emphasizes that insurance contracts are based on trust and honesty between the insurer and the insured?
Options
Principle of Subrogation
Principle of Contribution
Principle of Utmost Good Faith
Principle of Causa Proxima
MCQ
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Solution
Principle of Utmost Good Faith
Explanation:
Insurance contracts require full, honest disclosure and mutual trust because both the insurer and the insured must reveal material facts. Breach of this duty can render the contract voidable, preventing fraud and protecting both parties.
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