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“While general contracts work on the principle of „simple good faith‟ insurance contracts work on the principle of "utmost good faith‟ Explain the statement with reasons. |
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Answer» Insurance Contracts are different from General Contracts. While general contracts work on the principle of „simple good faith‟ insurance contracts work on the principle of „utmost good faith‟. The principle of utmost good faith is also known as principle of Uberrima Fides‟. a. In an insurance contract the seller is the Insurer and the buyer is the insured. In this case the buyer or the insured has the full knowledge of the property being insured and the seller is ignorant about it. This is a situation which is opposite of a general purchase contract. In a general purchase contract it is the seller who would have full knowledge and details of the property and not the buyer. b. Insurance is an intangible product. It cannot be seen or felt. It is simply a promise on the part of the Insurer to make good the loss incurred by the insured if and when it occurs. |
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