Mataracy
VIP Contributor
The principle of utmost good faith is very vital to every contract of insurance. Insurance contract is quite different from commercial contract.
In commercial contracts, the sellers presents or display a physical item or goods for sale and the buyer examine of 'caveat emptor' (let the buyer beware) applies to commercial contract. The physical display of the goods affords the buyer the opportunity yo examine what he intendeds to buy..
This is not so in contract of insurance in that the insurance companies ( insurers) who provide insurance services are engaged in invisible trade i.e the products can not be seen physically and the insuring public who transfer risks to be transferred to the insurers.
This is why both parties to an insurance contract must be truthful during their negotiation.
The information provided by the insured is what will guide the underwriter in deciding whether or not to accept the proposal. Though the underwriter can carry out a physical survey this will be based on the information given via the proposal firm.
The raw or first hand information to be relied upon by the underwriter is the o e given in the proposal form.
In commercial contracts, the sellers presents or display a physical item or goods for sale and the buyer examine of 'caveat emptor' (let the buyer beware) applies to commercial contract. The physical display of the goods affords the buyer the opportunity yo examine what he intendeds to buy..
This is not so in contract of insurance in that the insurance companies ( insurers) who provide insurance services are engaged in invisible trade i.e the products can not be seen physically and the insuring public who transfer risks to be transferred to the insurers.
This is why both parties to an insurance contract must be truthful during their negotiation.
The information provided by the insured is what will guide the underwriter in deciding whether or not to accept the proposal. Though the underwriter can carry out a physical survey this will be based on the information given via the proposal firm.
The raw or first hand information to be relied upon by the underwriter is the o e given in the proposal form.
