What is principle of utmost good faith in insurance?

1. The principle of utmost good faith, uberrimae fidei, states that the insurer and the insured must disclose all material facts before the policy inception.

2. Facts which may enhance the level of risk are called material facts.

3. The insurer or insurance company needs to declare all public disclosures and investment strategies while the insured needs to declare health condition, family medical history, lifestyle, food habits, smoking and alcohol history etc.


4. In case of non-disclosure or misrepresentation of material facts, the policy can be considered null and void.

5. This principle applies to both life insurance and general insurance policies.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)