General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Insurance contracts are based on utmost good faith, which requires the applicant to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Insurance is a contract of utmost good faith (uberrima fides): because the insurer relies on the applicant for information it cannot easily verify, the applicant must volunteer all material facts, not just answer questions literally. Concealment of a material fact — even an unasked one — can entitle the insurer to rescind. This duty is the foundation of the application process and of California's concealment and representation rules.
Why the other options are wrong
- B) The duty is broader than answering questions; material facts the applicant knows must be disclosed even if not asked.
- C) Utmost good faith binds the applicant to disclose; it does not obligate the insurer to accept every risk.
- D) The application must reflect the applicant's own statements; the agent recording impressions is neither authorized nor a substitute for the applicant's duty.
Memory hook
Utmost good faith = tell the insurer what you know, not just what it asks. Silence can be a lie here.