What does the duty of utmost good faith require in consumer insurance contracts?

The duty of utmost good faith, also known as "uberrima fides," is a fundamental principle in insurance contracts, particularly in consumer insurance. This duty requires that both parties—the insurer and the insured—engage in a relationship characterized by honesty and transparency.

Choosing to focus on both parties underscores the reciprocal nature of this obligation. The insured must disclose material information that could affect the insurer’s decision to accept the risk, while the insurer must provide clear terms, conditions, and coverage details. This mutual understanding ensures that there are no hidden risks or misrepresentations that could lead to disputes later on.

In contrast, while the other options touch upon aspects of honesty, none encapsulate the full essence of the duty as comprehensively as the idea that both parties must deal honestly and openly. Simply requiring the proposer to present truthful information limits the scope to one party's obligations, and an insurer's avoidance of negative disclosures could still leave gaps in information necessary to make informed decisions. Likewise, while agents should relay complete information, it does not capture the shared responsibility and overall obligation of both parties to uphold this principle of good faith throughout the insurance process.