Principle of Utmost Good Faith:
- Both the parties i.e. the insured and the insurer should show good faith towards each other.
- The insured must provide the insurer complete, correct and clear information of subject matter.
- The insurer must provide the insured complete, correct and clear information regarding terms and conditions of the contract.
- The principle is applicable to all contracts of insurance.
The Principle of Utmost Good Faith, is a very basic and first primary principle of insurance. According to this principle, the insurance contract must be signed by both parties (i.e. insurer and insured) in an absolute good faith or belief of trust.
The person getting insured must willingly disclose and surrender to the insurer his complete true information regarding the subject matter of insurance. The insurers liability gets void if any facts, about the subject matter of insurance are either omitted, hidden, falsified or presented in a wrong manner by the insured.