Mr Ajai did not disclose that he stores drums of petrol when he took a fire insurance policy. Under which of the following principles will the insurance com...

Assessment: WAEC SSCE - Commerce - 1999 (Objective) Subject: Commerce

Question 1 Report

Mr Ajai did not disclose that he stores drums of petrol when he took a fire insurance policy. Under which of the following principles will the insurance company reject his claims
Answer Details
The insurance company will reject Mr. Ajai's claims under the principle of "Utmost good faith". This principle requires that the policyholder must disclose all relevant information that would affect the insurer's decision to accept or decline the policy. In this case, Mr. Ajai failed to disclose that he was storing drums of petrol, which is relevant information that would have affected the insurer's decision to accept or decline the policy. As a result, the insurer can reject his claims due to the breach of this principle.
Read lesson note on Legal Aspect Of Business (WAEC)
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