What is Utmost Good Faith?
The principle of Utmost Good Faith means that all contracts of insurance must be negotiated with the utmost good faith which applies both to the insurer and the proposer. “It is an obligation of the insured to disclose material facts, i.e., facts that would influence the insurer in deciding whether to accept the risk or in fixing the terms (including the price) of the contract.” (“Insurance” by A.H. Mowbray) “Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact and his believing the contrary.” (Carter V. Boehnm, 1976) “The duty of good faith implies that the proposer shall disclose to the Insurers everything material about the proposed subject matter of insurance which he knows, or ought to know, and that the insurer will disclose to the proposer the terms and conditions upon which the risk is likely to be acceptable.” (“Personal Accident Insurance” by R.C. Blanchard p. 7-8) “The duty of utmost good fai
