Utmost Good Faith (Uberrimae Fidei)
Utmost good faith is the foundational legal principle of insurance contracts. It requires both parties — the insurer and the policyholder — to deal honestly and disclose all material facts. Breach by the policyholder is the most common reason claims are declined or policies avoided.
Definition
Utmost good faith (Latin: uberrimae fidei) is a legal doctrine that requires parties to an insurance contract to act with complete honesty and to volunteer all information that could materially affect the other party's decision. It goes beyond ordinary contract law's requirement of good faith — it demands proactive disclosure, not just avoiding active fraud.
Insurance contracts are uniquely affected by information asymmetry: the insured knows far more about the risk being transferred (their health, their property's condition, their claims history) than the insurer does at the point of quotation. Utmost good faith addresses this by requiring the insured to bridge the information gap.
What the policyholder must disclose
Must be disclosed
- Previous claims and incidents (whether claimed or not)
- Criminal convictions (relevant to risk)
- Medical history (health and life insurance)
- Existing damage to insured property
- Changes in use of insured property or vehicle
- Co-habitants or additional drivers
Need not be disclosed
- Facts the insurer already knows
- Facts the insurer ought to know from general commercial knowledge
- Facts that reduce the risk (beneficial to insurer)
- Immaterial facts with no bearing on the risk assessment
Consequences of breach
Under the UK Insurance Act 2015, the consequences of non-disclosure are proportionate to what the insurer would have done with accurate information. The old "all or nothing" rule — where any non-disclosure allowed the insurer to avoid the entire policy — was replaced with a fairer system. But the practical outcome for significant non-disclosures remains serious: voided policies, declined claims, and repayment of claim proceeds already paid.
For the specific category of facts that must be disclosed, see material fact. For how this duty applies specifically at renewal and life events, see our guide on when to review your cover.
Utmost good faith FAQ
Frequently asked questions
- Yes. Utmost good faith is a mutual obligation. The insurer must disclose material facts about the policy terms, exclusions, and conditions that could affect the policyholder's decision to take out the policy. In practice, the doctrine is most often invoked against policyholders — but regulators (including the FCA in the UK) impose conduct rules that translate the insurer's duty into practical obligations around clear disclosure of terms. See the FCA guidance on insurance conduct.
- Under UK law (Insurance Act 2015), the remedy depends on what the policyholder would have done if the insurer had known the true position. If the insurer would not have written the policy at all, they can avoid the contract from inception. If they would have charged a higher premium, the claim can be reduced proportionately. If they would have included an exclusion, the claim can be declined on that basis. The old rule under the Marine Insurance Act 1906 allowed avoidance in all cases; the 2015 Act introduced proportionate remedies.
- Only material facts must be disclosed — information that would influence a prudent insurer's decision to accept the risk or set the premium. Immaterial facts do not need to be declared even if not asked. The challenge is that policyholders do not always know which facts are material. When in doubt, disclose. The principle is reinforced by specific questions on application forms — answering these accurately is the minimum duty. But volunteering additional relevant information beyond what is asked is good practice. See material fact.
- Yes. The duty continues throughout the policy period. Policyholders must not make fraudulent claims, exaggerate losses, or provide false supporting documents. Fraudulent claims are a specific breach that typically entitles the insurer to avoid the entire policy from inception, forfeit all previous claims, and potentially refer the matter to law enforcement. The principle of utmost good faith at claims stage is a strict standard — honest estimates of loss value that turn out to be wrong are treated differently from deliberate inflation.