Utmost Good Faith….What is this?

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The insured usually has a much greater knowledge about the risk being insured, and because Insurance Companies need to know this information to decide whether they can insure this risk, the insurance company depends on the proposer / insured for this information. If a loss occurs and the Insurance Company finds that a material fact was not disclosed, the claim may be declined by the Insurance Company.


Utmost Good Faith is complete and total honesty—all statements must be true and all material facts must be revealed;

The principle of utmost good faith makes the application for insurance easier. Utmost good faith is usually divided into representations and warranties.


Representations are the statements made by the insured on the insurance proposal form or application. Many of these representations are responses to questions to determine whether the applicant is insurable and whether the Insurance company can cover the risk.

An insurance contract is voidable by the insurer if any representation is known to be false by the client, for example, if the Policy Holder did not disclose that they had a previous claim, conviction or cover restriction.


warranty is a promise by the client to do certain things or to satisfy certain requirements, or the warranty becomes part of the insurance contract. If the insured breaches the warranty, the insurer can void the contract and deny payment of a claim.


5 examples of how to apply Utmost Good Faith when entering an insurance contract / policy


The Insurance Broker / Intermediary will ask the following questions:


  • Please confirm if you have any Convictions, Prosecutions, Judgements or Receiverships or ever had any Insurance declined, cancelled or refused in the past.


  • You must disclose any previous claims or incidents (whether insured or not) that you may have had. The Intermediary will ask have you made any claims in the last 5 years, so please make sure you have the details and dates of previous claims.


  • When taking out Commercial Motor Insurance: If you have received penalty points or if you have any endorsements on your licence, these must be disclosed.


  • In relation to Property Insurance, it is a legal requirement to have smoke detectors in a single unit property, if you do not have smoke detectors you must declare this.


  • When taking out Liability Insurance, you should disclose any previous convictions or investigations in to breaches of Health & Safety legislation


  • When taking out health insurance a proposer is required to fully disclose all relevant pre-existing health conditions.


It is necessary that the insured act in good faith to disclose relevant facts to the insurer when applying for insurance.


Insurance is a contract of the utmost good faith.  The underwriter knows nothing of the particular circumstances of the risk.  The client knows a great deal about this and it is the duty of the client to inform the underwriter of everything that he is not taken as knowing, so that the contract may be entered into on an equal footing.


Remember: Please disclose any material information to the Insurer and disclose as much information that you know about the risk.

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