An insurance contract is a contract of utmost good faith. As per this principle, the policyholder is required to furnish all the important details about himself which are asked in the proposal form. The insurance company issues the policy on the good faith that the insured has provided every information in the proposal form correctly. If any important information, which affects the risk covered under the policy, is hidden or lied about, the principle of utmost good faith is breached. In such cases, the insurance contract becomes void and the insurance company has the right to reject the claim under the policy.
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