Which principle requires complete honesty and the disclosure of all relevant facts in insurance?

The principle that mandates complete honesty and the disclosure of all relevant facts in insurance is known as Utmost Good Faith, or "uberrima fides." This principle is foundational in the insurance industry as it establishes the expectation that both parties—insurers and insureds—must act honestly and transparently during the insurance process.

When an applicant for insurance is seeking coverage, they are obligated to provide full and accurate information about their risk exposure. This means that they must disclose any facts that could affect the insurer's decision to offer coverage or set the terms of that coverage. If an insured fails to disclose material facts or provides false information, it can lead to claims being denied or policies being voided. Therefore, Utmost Good Faith serves to protect both parties in the insurance contract by ensuring that decisions are made based on complete and truthful information.

Indemnity, subrogation, and insurable interest are also important concepts within insurance but do not specifically encapsulate the requirements for honesty and full disclosure. Indemnity relates to compensating insureds for their losses, subrogation deals with the right of insurers to pursue third parties to recover claims paid, and insurable interest refers to the requirement that the policyholder must have a legitimate interest in