ZIMSEC O Level Commerce Notes: Insurance: Insurable Interest and Utmost good Faith
- Enables one to insure one’s own property.
- Where the insured should directly suffer financial loss if the risk occurs.
- One cannot insure the property of another.
- Because on has no insurable interest.
- If one insures the property of another one might be tempted to deliberately cause the risk to occur in order to make a profit from the loss e.g. insuring a neighbour’s house.
Utmost good faith
- Uberrima Fide.
- The insured must reveal truthfully any relevant details concerning the insured item in the proposal form or claim form.
- The insurer must reveal all details or conditions about the contract to be insured:
- in the policy document.
- Failure to disclose the relevant details makes the contract of insurance void.
- Allows risks to be accurately and properly assessed.
- And fair premiums to be fixed.
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