Concept of Utmost good faith in insurance

In insurance contracts, the legal doctrine of utmost good faith applies. The insured has the duty to disclose all material facts, which have a bearing on the insurance. A breach of this duty may make the contract void or voidable.


The duty of disclosure continues throughout the policy period. The proposal form also includes a declaration by the insured saying that the statements declared by him are true, and that they can form the basis of the insurance contract.

This principles also expect the insured to act as if he is uninsured all the time, and takes care and safeguards his assets from the perils.

Following a loss, he is then expected to salvage as much of the property as possible.

Extracts from “Guide for Fire Consequential Loss Insurance (IC-57)” by Dr. Rakesh Agarwal. Copyright of Sashi Publications, Kolkata and

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