On The Utmost Good Faith Principle Of Insurance Law

The utmost good faith principle was first established in"Marine Insurance Act"of Great Britain in 1906, which has been adopted one after another in insurance law or insurance practice by representative countries belonging to common-law system and continental law system later. It is primary principle of insurance law which requires that activities of insurance be fair and proper and balance of interests be reached. It has many similarities as well as great differences compared to good faith principle─the former requires higher demand on party concerned in insurance than the latter does on common party concerned in civil and commercial contract. The utmost good faith principle has been in essence established in insurance law of our country.The common reason why the utmost good faith principle is established in insurance law of many countries of many countries all over the world is that the specialities in production, trade and consumption of insurance commodity easily lead to moral hazard and converse selecting, which can be overcomed by the utmost good faith principle as an effective strategy. The special reason why the utmost good faith is established in insurance law of our country is that the specialities of our country's economical, cultural and social development lead to lack of good faith in provider, medium and consumer.The duties of disclosure ,explanation and notice are regulated in our country's insurance law, all of which are important contents of the utmost good faith principle. Disclosure and notice are duties imposed on the applicant and insured according to the utmost good faith principle. Explanation is the utmost good faith duty of the insurer.Although the utmost good faith is regulated in our country's insurance law, there are a lot of deficiencies. As the utmost good faith principle is developing with the change of time and has richer meaning, the relative legislation about utmost good faith principle should be perfected in our country's insurance law to suit the practical needs of our country's insurance business. The perfection can be done from two factors as follows: first, perfect the legislation of current duties of disclosure, explanation and notice; second, add the duty of advice of the insurer, insurance agent and servant, adopt the warranty of the applicant and the insured and establish the institution of waiver and estoppel of the insurer.