Insurance WAEC

Utmost Good Faith

Aperçu

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.

Objectifs

  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

Note de cours

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.

Évaluation de la leçon

Félicitations, vous avez terminé la leçon sur Utmost Good Faith. Maintenant que vous avez exploré le concepts et idées clés, il est temps de mettre vos connaissances à lépreuve. Cette section propose une variété de pratiques des questions conçues pour renforcer votre compréhension et vous aider à évaluer votre compréhension de la matière.

Vous rencontrerez un mélange de types de questions, y compris des questions à choix multiple, des questions à réponse courte et des questions de rédaction. Chaque question est soigneusement conçue pour évaluer différents aspects de vos connaissances et de vos compétences en pensée critique.

Utilisez cette section d'évaluation comme une occasion de renforcer votre compréhension du sujet et d'identifier les domaines où vous pourriez avoir besoin d'étudier davantage. Ne soyez pas découragé par les défis que vous rencontrez ; considérez-les plutôt comme des opportunités de croissance et d'amélioration.

  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

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Questions précédentes

Vous vous demandez à quoi ressemblent les questions passées sur ce sujet ? Voici plusieurs questions sur Utmost Good Faith des années précédentes.

WAEC SSCE - Insurance - 2015

Question 1 Rapport

List and explain five principles of insurance.

Voir la réponse