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, so both the applicant and the insurer carry an elevated duty to disclose material facts honestly. 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. The statement that the insurer may rescind for any reason at any time overstates the rule — rescission requires materiality. No separate sworn honesty affidavit filed with the Department of Insurance is required. And insurance contracts do not require notarization or witnessing; nothing in a notarial certification supplies the duty of good faith.