“Insurance contracts are uberrimate fide contracts.” Explain
Dear student,
Insurance contracts are Uberrimae Fidei, i.e. based on principle of utmost good faith. Before entering into an insurance contract, it is the duty of both the parties to disclose all the material facts. An insurer, i.e. the insurance company has no information about the subject to be insured, so it is the responsibility of the insured to disclose all the material information to the insurer. The insurer relies on the information provided by the insured and fixes the premium accordingly. So good faith is required from each party's side. If a party fails to disclose any material fact, the other party may avoid the contract on the ground of material misrepresentation.
Regards
Insurance contracts are Uberrimae Fidei, i.e. based on principle of utmost good faith. Before entering into an insurance contract, it is the duty of both the parties to disclose all the material facts. An insurer, i.e. the insurance company has no information about the subject to be insured, so it is the responsibility of the insured to disclose all the material information to the insurer. The insurer relies on the information provided by the insured and fixes the premium accordingly. So good faith is required from each party's side. If a party fails to disclose any material fact, the other party may avoid the contract on the ground of material misrepresentation.
Regards