Utmost Good Faith Flashcards
Explain what is Utmost Good Faith?
This is also known as “uberrimae fides” defined in the contracts. The insurer and the person who is applying for insurance have a duty to deal honestly and openly with each other.
What are the four stages in Disclosure Requirements?
PRE-CONTRACTUAL STAGE
RENEWAL OF GENERAL INSURANCE CONTRACTS
DURING THE CURRENCY OF THE CONTRACT
DURING THE CLAIMING PROCESS
How does Utmost Good faith apply in the Pre-contractual stage?
Both parties have a duty to disclose accurate and relevant information in a clear, concise and in a timely manner to enable the consumer to make an informed decision and the insurer to decide on suitable terms of acceptance of the risk.
How does Utmost Good faith apply in the Renewal of general insurance contracts?
The onus is on the insured to inform any material changes in the risk to allow the insurer to carry out an appropriate assessment of the risk so that a premium commensurate with the risk accepted can be charged.
How does Utmost Good faith apply During the currency of the contract?
Changes in the contract will occur, an example would be when the insured changes his car.
An increase in the risk, an example would be any alteration in the property insured, which increases the risk of damage as the cover will cease unless the alteration is admitted.
How does Utmost Good faith apply During the claiming process?
Depends on the relevance of the material fact and nature of the risk proposed for insurance. The applicant must ensure that the proposal form is completely accurate.
What are Material Facts?
They are the disclosed information by the insured for the insurance contracts and it is the insured’s duty to provide relevant material facts during the process.
What must contain in The Proposal Form?
Included with specific questions that are designed to elicit information relevant to the insured’s decision.
The questions should be appropriately scoped so as to enable an insurance applicant to answer the questions with a reasonable degree of confidence.
Must expressly request the insurance applicant to disclose any other relevant exceptional circumstances.
What would be the case in Breach of Good Faith?
MISREPRESENTATION
NON-DISCLOSURE
What is the Schedule 9 of the Financial Service Act 2013?
It prescribes the “pre-contractual disclosure and representations, and remedies for misrepresentations” and distinguishes between a “consumer insurance contract” and a “non-consumer insurance contract”.
What is a Non-Consumer Insurance Contract?
They are subject to-
PARA 4 PART 2 of Schedule 9 of the FSA
“Before a contract of insurance is entered into, a proposer shall disclose to the insurer a matter that:
a) He knows to be relevant to the decision of the insurer on whether to accept the risk or not and the rates and terms to be applied
or
b) A reasonable person in the circumstances could be expected to know to be relevant.”
What is a Consumer Insurance Contract?
If the individual applicant has fully and faithfully answered all the questions in the proposal form.
In the absence of any specific question or an express request for relevant information, the insurer shall not subsequently repudiate a claim on grounds of non-disclosure as stipulated in-
PARA 5 PART 2 of Schedule 9 of the FSA
“Where a proposer fails to answer or give an incomplete or irrelevant answer to a question contained in the proposal form or asked by the insurer and the matter was not pursued further by the insurer, compliance with the duty of disclosure in respect of the matter shall be deemed to have been waived by the insurer”.
