WAEC Commerce 2007 Question 39

Question 39

Insurance

Use the following information: Madam Tope insured her shop premises for the sum of D60,000, when insuring the shop, she did not tell the Insurance Company that she cooks in the shop, but told the Insurance Company that she sells second hand clothes. Hence she insured her store against natural causes. Tope's shop got burnt yesterday by fire from the cooking pot.
Which of the following insurance principles was breached by Madam Tope?

  1. A.Insurable interest
  2. B.Contribution
  3. C.Utmost good faith
  4. D.Subrogation.
Show the answer and explanation

Answer: C (Utmost good faith)

Explanation

She hid the fact that she cooks in the shop, breaking utmost good faith.