ZIMSEC O Level Commerce Notes: Insurance: Insurable Interest and Utmost good Faith

Insurable interest

  • 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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