Definition of Utmost Good Faith (Uberrimae Fidei):

• The principle that requires both parties in an insurance contract (the insurer and the insured) to disclose all material facts honestly and completely before the policy is issued.

Material Facts:

• Information that would influence the insurer’s decision to accept or reject the risk or determine the terms of coverage.
• Examples include pre-existing medical conditions for health insurance or prior claims history for auto insurance.

Duty of Disclosure:

• The insured must provide all relevant details about the risk being insured.
• The insurer must clearly explain the terms, conditions, and exclusions of the policy.

Effect of Breach:

• If a party fails to disclose material facts, the insurer may void the policy, refuse claims, or take legal action against the insured.

Application in Law:

• The principle applies to all types of insurance contracts, including life insurance, property insurance, and liability insurance.