What does "utmost good faith" require from both parties in an insurance agreement?

The principle of "utmost good faith," also known as "uberrima fides," is a fundamental concept in insurance agreements that requires both parties—the insurer and the insured—to act honestly and disclose all relevant information fully and truthfully. This includes the obligation of the insured to share all material facts that could influence the insurer's decision to underwrite the policy or determine the terms of coverage.

By disclosing all relevant information, the risk assessed by the insurer is accurate, allowing for fair evaluation and pricing of the insurance. If either party fails to uphold this principle, it can lead to disputes and potentially void the insurance contract. Therefore, the duty of truthful disclosure underpins the trust necessary for the relationship between the insurer and the insured, making it the correct interpretation of what "utmost good faith" entails.