Commerce WAEC

The term utmost good faith in insurance means?

A. both the insured and insurer must disclose all information
B. only the insurer must disclose all information
C. the beneficiary must disclose all information
D. only the insured must disclose all information

Correct Answer: Option A

A. both the insured and insurer must disclose all information

Explanation

Utmost good faith is a common law principle (sometimes called Uberrimae Fidei). The principle means that every person who enters into a contract of insurance has a legal obligation to act with utmost good faith towards the company offering the insurance. It requires transacting parties to act honestly and not mislead or withhold critical information from one another.

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