Question

Mr Mahesh is the owner of a factory manufacturing crackers. He insured

his factory against fire . While taking the insurance policy he did not disclose

about the product being manufactured , as this would have led to payment of

much bigger premium. Once the factory severely got damaged in fire but the

Insurance Company refused to accept his claim. He filed a case against the

company. The court favoured insurance company on the ground that Mr

Mahesh has not revealed the facts related to the type of product being

manufactured. So, the contract of insurance is voidable at the discretion of

insurer.

Answer the following questions:

Q a) Which principle of insurance is violated by Mr Mahesh? Explain it.

Q b) Why did Mr Mahesh violate this principle? ​

Answer 1

Answer:

a. risk profile of business b. cost of premium

Answer 2

Answer:

a.utmost good faith

b.to save money