Insurance contracts are described as contracts of 'utmost good faith' (uberrimae fidei) PRIMARILY because:
Explanation
Insurance contracts are uberrimae fidei (utmost good faith) because the insurer must rely heavily on the truthfulness of the applicant's representations — most material facts about health, occupation, finances, prior insurance, and habits are uniquely within the applicant's knowledge. California Insurance Code §332 codifies this: 'Each party to a contract of insurance shall communicate to the other, in good faith, all facts within his knowledge which are or which he believes to be material to the contract.' Concealment (§330) or material misrepresentation (§331, §359) gives the insurer rescission rights during the contestable period. Option A overstates — rescission requires materiality. Option C — no separate affidavit is required. Option D — insurance contracts do not require notarization.
Law Reference: Cal. Ins. Code §332 (utmost good faith)Practice all 315 questions free — no signup required.
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