Utmost good faith
The principle of “utmost good faith” is one of the basic and most crucial concepts in marine insurance contracts. This has been fundamental part of marine insurance for centuries. Here mainly the honest and fair relationship and transparency between the insurer and the insured is explained. Let’s next examine the significance of this. This is especially important to confirm that both the insured and the insurer have a clear understanding of the risks involved in the insurance contract. The insurer is liable to pay only if the insured suffers a loss covered by the policy. If the insurer lacks the necessary information, it may be unable to appropriately estimate the risks and may wind up paying out for a loss for which it should not have been liable. Additionally, this principle is important to prevent fraud and misrepresentation. The opposite party may be entitled to nullify the agreement if one party withholds or falsely reports information that is significant. This might res...
