- 6 Marks
Question
Tatafo insured his 2-storey house with an insurance company against fire and burglary incidents. A question in the proposal form required the insured to state any peculiar or special environmental information on the location of the house, to which Tatafo wrote “None.” The house was recently destroyed by fire, which started from a nearby petrol station. Tatafo filed for claims from the insurance company, but the insurance company refused to pay upon discovering that the house was built behind the petrol station, which Tatafo failed to disclose on the insurance proposal form. Tatafo is aggrieved and intends to sue the insurance company.
Required:
Advise Tatafo, stating the legal issues involved.
Answer
The legal issue involved here pertains to the principle of utmost good faith (uberrimae fidei) in insurance contracts. Under this principle, the insured is required to disclose all material facts that could affect the insurer’s decision to accept the risk or set the premium.
In this case, the proximity of the petrol station was a material fact that Tatafo should have disclosed, as it significantly increased the risk of fire. The insurer’s refusal to pay the claim is likely justified based on Tatafo’s non-disclosure. As such, the insurance company may legally uphold its decision not to pay.
Tatafo is advised not to sue the insurance company, as the non-disclosure of a material fact could lead to the denial of his claim, and any legal action may likely fail due to this breach of duty.
Explanation:
In insurance law, the principle of utmost good faith requires both parties to act honestly and not conceal information that is relevant to the contract. Tatafo’s failure to disclose the location of his house in relation to the petrol station constitutes a breach of this principle.
- Tags: Claims, Insurance, Legal Principles, Non-Disclosure
- Level: Level 1
- Topic: The Nigerian Legal System
- Series: MAY 2023
- Uploader: Theophilus