Insurance WAEC

Utmost Good Faith

Resumen

When you buy a shirt, the seller need not warn you that it shrinks; you can inspect it and decide for yourself. Insurance is different. The insurer cannot see inside your warehouse, read your medical history or watch how you drive, so it must trust what you tell it. That trust is not left to chance. The law raises every insurance contract to a higher standard of honesty called utmost good faith, and it places a positive duty on you to volunteer every fact that matters.

In this lesson you will learn what utmost good faith means and why insurance, above almost every other contract, demands it. You will learn how to tell a material fact from an unimportant one, which facts you must disclose and which you may keep to yourself, and exactly how a policy can collapse through non-disclosure, concealment or misrepresentation. Above all you will learn the distinction examiners test every year: innocent breach against fraudulent breach, and the very different remedy each one hands the insurer.

Objetivos

  1. Define utmost good faith and explain why insurance contracts demand it
  2. Explain the duty of disclosure and identify what counts as a material fact
  3. Distinguish facts that must be disclosed from those that need not be
  4. Describe the breaches of utmost good faith: non-disclosure, concealment, innocent and fraudulent misrepresentation
  5. State the effect of each breach on the validity of the policy

Nota de la lección

Emeka applies for a health policy and, embarrassed about it, says nothing of the heart condition he was treated for last year. The insurer, knowing none of this, happily issues the cover. Eight months later Emeka is hospitalised and submits a large claim. The insurer investigates, discovers the earlier illness, and refuses to pay a single naira. Emeka is furious: he never lied, he says, he was simply never asked. Whether the insurer is right turns entirely on one principle, the one that sits underneath every proposal form you will ever sign: the duty of utmost good faith. Master it and you can predict how a dispute like Emeka's will end before a court ever does.

Evaluación de la lección

Felicitaciones por completar la lección del Utmost Good Faith. Ahora que has explorado el conceptos e ideas clave, es hora de poner a prueba tus conocimientos. Esta sección ofrece una variedad de prácticas Preguntas diseñadas para reforzar su comprensión y ayudarle a evaluar su comprensión del material.

Te encontrarás con una variedad de tipos de preguntas, incluyendo preguntas de opción múltiple, preguntas de respuesta corta y preguntas de ensayo. Cada pregunta está cuidadosamente diseñada para evaluar diferentes aspectos de tu conocimiento y habilidades de pensamiento crítico.

Utiliza esta sección de evaluación como una oportunidad para reforzar tu comprensión del tema e identificar cualquier área en la que puedas necesitar un estudio adicional. No te desanimes por los desafíos que encuentres; en su lugar, míralos como oportunidades para el crecimiento y la mejora.

  1. The principle of utmost good faith requires a proposer to: A. Disclose only the facts the insurer asks about B. Disclose voluntarily every material fact known to the proposer C. Disclose facts only after a claim is made D. Rely on the insurer to inspect the risk Answer: B
  2. A material fact is one which: A. The proposer personally considers interesting B. Would influence a prudent insurer in accepting or rating the risk C. Is written in every proposal form D. Only becomes relevant after a loss Answer: B
  3. Which of the following need NOT be disclosed to the insurer? A. A previous fire at the premises to be insured B. A previous policy cancelled by another insurer C. A newly fitted burglar alarm that reduces the risk D. A serious illness on a life proposal Answer: C
  4. A false statement of fact made honestly in the belief that it is true is: A. A fraudulent misrepresentation B. An innocent misrepresentation C. Concealment D. A warranty Answer: B
  5. Where a proposer is guilty of fraudulent misrepresentation, the insurer may: A. Avoid the policy but must return the premium B. Only reduce the claim proportionately C. Avoid the policy, refuse the claim and retain the premium D. Do nothing, as the policy is fully valid Answer: C

Libros Recomendados

Principles of Risk Management and Insurance
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Fundamentals of Risk and Insurance
Fundamentals of Risk and Insurance
Subtítulo: Tenth edition
Editorial: Wiley
Año: 2008
ISBN: 978-0-470-08753-4
Descripción: A clear account of the nature of risk and the economics of insurance, written for beginning students across life, health, property and liability insurance.
Fundamentals of Insurance
Fundamentals of Insurance
Subtítulo: Second edition
Editorial: Himalaya Publishing House
Año: 2017
ISBN: 978-93-5097-079-9
Descripción: An accessible treatment of insurance in four parts: the basics of risk, insurance management, life insurance and non-life insurance.

Preguntas Anteriores

¿Te preguntas cómo son las preguntas anteriores sobre este tema? Aquí tienes una serie de preguntas sobre Utmost Good Faith de años anteriores.

WAEC SSCE - Insurance - 2015

Pregunta 1 Informe

List and explain five principles of insurance.

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