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 Contract of utmost good faith- (Uberrima fide)

It should be noted that when an insurance contract is

entered into, the insured person knows everything about

the risk that is insured but the insurer knows nothing. The

insurer can only assess the probability of loss (depending on

which the insurer may decide to accept the risk and

calculate a premium amount to be charged) based on what

the insured tells him about the risk.

Similarly, the insured would not understand what the

benefits are in relation to the cost paid (premium paid)

unless the same are made known to him to enable him to

make an informed choice.

Hence, in an insurance contract disclosure of all material

information has to be made by both the parties at the time

of entering into a contract; without missing out the tiniest

details.

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