KGNRT6AN Practice Test

1Single Choice

An insurance policy is fundamentally a contract based on the principle of utmost good faith (uberrimae fidei). What does this principle require of both the insurer and the insured during the application and underwriting process?

A.The insurer must always pay claims within 30 days of receipt, and the insured must accept any settlement offered.
B.Both parties must disclose all material facts honestly; the insurer must not misrepresent coverage terms, and the insured must not conceal material information.
C.The insured must pay premiums in advance for the entire policy term, and the insurer must accept every applicant who applies.
D.Only the insurer is held to a higher standard because it drafted the contract, while the insured has no disclosure obligation.

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