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Question
"The insured must disclose all material facts and the insurer must make clear all the terms and condition in the insurance contract." Which principle of insurance is referred to in this statement?
Options
Utmost good faith
Insurable interest
Indemnity
Contribution
Solution
Utmost good faith
Explanation:
An insurance contract is based on utmost good faith on the part of both the parties. It is the legal duty of the proposer (one who wants to get an insurance policy) to disclose all the material facts about the subject to be insured. A material fact is one which would affect the judgement of the insurer in assessing the degree of risk. It includes any communication made to or any information received by the proposer.
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