Which of the following constitute Breach of Utmost Good faith?
A
Non-Disclosure
B
Misrepresentation
C
Both A & B
D
None of the above
Correct Answer: Both A & B
Misrepresentation and non-disclosure constitute breach of utmost good faith. In an insurance policy, misrepresentation on the behalf of the insured gives the insurance company a right to terminate the policy. Non-disclosure means failure to divulge a relevant fact when applying for an insurance policy. This is a violation of the principle of good faith which should be observed in insurance negotiations.