Insurance · Legal Principles of Insurance
A general insurance company is processing a high-value industrial fire claim where the principle of 'Utmost Good Faith' is under scrutiny. The insured party failed to disclose a material fact that would have influenced the premium or the decision to provide cover. In insurance law, which of the following best describes the insurer's right in this scenario?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The insurer can only refuse the claim if it can be proven that the insured intentionally started the fire.
- 2The insurer must pay the claim in full but can cancel the policy for the next year.
- 3The insurer can treat the contract as voidable from inception due to the breach of Uberrimae Fidei.✓
- 4The insurer can reduce the claim amount by 50 percent as a penalty for negligence.
Correct answer
The insurer can treat the contract as voidable from inception due to the breach of Uberrimae Fidei.
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