Introduction

5.1 When an assured and an insurer negotiate towards the conclusion of an insurance contract, there is a mutual duty of utmost good faith, owed by each to the other. It is a duty of utmost good faith, because it requires more than the usual duty attendant on a party to any contract (both commercial and consumer contracts, both insurance and non-insurance contracts) not to misrepresent material facts to the other. The duty of utmost good faith requires the parties to make an insurance contract, at least at common law, not only to ensure that any representation it makes to the other is substantially correct, but also to disclose or impart to the other material information.