Utmost Good Faith Rrequired In Insurance Contracts
. It's like good faith, but one step above it. Something that says you're sure, but not only that, you're damn sure too. What exactly is utmost good faith, and how important is it? What happens if you lie in one of the questions they ask in the policy?
Utmost good faith is a modern term that refers to the implied covenant of good faith and fair dealing in contract law. It's actually a very technical and legal term, that has a great importance, even though it may seem pretty mundane. Of course, when we're talking to someone about something, we're usually doing our best to say things as they are. Unless we're deliberately embellishing a story, if we're recounting a factual event, we try to be as precise and exact as we can. We tell the story as it happened, and the details that seem relevant are said as well. This is known as good faith, meaning we do our best to tell the truth, and to tell events as they were. Should this be part of a legally binding agreement, it would be called good faith, and would generally not be applied against something of great value.
When it comes to insurance contracts however, the law assumes utmost good faith. This is as far as you can go without saying that you must be completely, a hundred percent certain of every little details. Basically, what that's saying is it's no longer up to you to decide whether a detail is relevant, or whether you should place something in context or not. It means every little detail, every word and every check mark on the contract, must be completely accurate. With utmost good faith, if the insurance company finds a single omission, it can consider it a breach of contract, and you have no say over it. That's also where the term often comes up. The fact is that when you get an insurance policy, the company doesn't check if most of the information you gave was true, because it doesn't have to. Once you file a claim, that's when it goes out and verifies everything. If you lied, or if you omitted something, even if it wasn't deliberate, then they are legally allowed to not pay, and break the contract, rendering all the premiums you paid completely useless.
With this legal term, it's no longer the case that you can claim that you forgot, or you weren't paying attention to the details. That's why it's so important to make sure every single bit of information you provide the company is accurate and factual. That's also why keeping records of what happened is a good idea. There's nothing left to chance, and good faith is then just not an issue.
by: Casey Trillbar
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