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ABSTRACT
This research work examined the effect of utmost good faith (uberrima fides) in fidelity guarantee. The explanatory and descriptive research design was adopted in the study. 100 copies of questionnaire was distributed to respondents. The study revealed that most companies have been using this principle to repudiate liability in most case as a result of the insured, inability to disclose all material facts. The principle of utmost good faith is indeed important and must be duly observed. It was therefore concluded that it is important to note that organizations must learn to report alleged case or fraud by their employees to the police for investigation and possible prosecution. From the findings, it was therefore recommended that the insured should as much as possible always try to understand the terms exception and condition of the contract into which they intended to enter, also, the parties to the contract should try to always comply with terms of the contracts.
TABLE OF CONTENTS
TITLE PAGE – – – – – – – – – – i
CERTIFICATION – – – – – – – – – ii
DEDICATION – – – – – – – – – iii
ACKNOWLEDGEMENT – – – – – – – – iv
ABSTRACT – – – – – – – – – – v
TABLE OF CONTENTS – – – – – – – – vi
CHAPTER ONE
BACKGROUND OF THE STUDY
1.1 INTRODUCTION – – – – – – – – 1
1.2 STATEMENT OF PROBLEM – – – – – – 2
1.3 PURPOSE OF STUDY – – – – – – – 3
1.4 RESEARCH QUESTION – – – – – – – 4
1.5 SIGNIFICANCE OF THE STUDY – – – – – – 5
1.6 COPE/DELIMITATION OF STUDY – – – – – 5
1.7 DEFINITION OF TERMS – – – – – – – 6
REFERENCE – – – – – – – 7
CHAPTER TWO
LITERATURE REVIEW
2.1 INTRODUCTION – – – – – – – – 8
2.2 THE DUTY OF DISCLOSURE – – – – – – 9
2.3 DURATION OF THE DUTY OF DISCLOSURE – – – – 11
2.4 CONTRACTUAL DUTY OF UTMOST GOOD FAITH – – – 13
2.5 MATERIAL FACTS – – – – – – – – 16
2.6 HOW THE DUTY APPLIES TO FIDELITY GUARANTEE – – 20
2.7 FACT WHICH NEED AND NEED NOT TO BE DISCLOSED – – 21
2.7.1 FACTS WHICH NEED TO BE DISCLOSED IN FIDELITY
GUARANTEE – – – – – – – – – 22
2.7.2 FACTS WHICH NEED NOT TO BE DISCLOSED IN FIDELITY
GUARANTEE – – – – – – – – – 24
2.8 MODIFICATION ON THE LAW OF UTMOST GOOD FAITH – 25
2.9 BREACH OF UTMOST GOOD FAITH – – – – – 26
2.9.1 THE EFFECT OF BREACH – – – – – – – 28
2.10 THE IMPORTANCE OF THE DUTY iN FIDELITY GUARANTEE – 29
REFERENCE – – – – – – – – – 31
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 INTRODUCTION – – – – – – – – 32
3.2 RESEARCH DESIGN – – – – – – – 33
3.3 POPULATION OF THE STUDY – – – – – – 33
3.4 SAMPLING DESIGN AND PROCEDURE – – – – 33
3.5 DATA COLLECTION INSTRUMENT – – – – – 34
3.6 ADMINISTRATION OF QUESTIONNAIRE – – – – 34
3.7 PROCEDURE FOR PROCESSING AN ANALYZING
COLLECTED DATA – – – – – – – – 35
3.8 LIMITATION OF THE METHODOLOGY – – – – 35
REFERENCE – – – – – – – – – 36
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1 INTRODUCTION – – – – – – – – 37
4.2 CLASSIFICATION AND ANALYSIS OF RESPONSE IN THE
QUESTIONNAIRE – – – – – – – – 37
4.3 ANALYSIS OF OTHER DATA – – – – – – 41
4.3.1 ANALYSIS OF INTERVIEW SCHEDULES – – – – 41
4.4 DISCUSSION ON FINDINGS – – – – – – 42
REFERENCE – – – – – – – – – 43
CHAPTER FIVE
SUMMARY, CONCLUSIONS, RECOMMENDATION AND SUGGESTION FOR FURTHER STUDY
5.1 INTRODUCTION – – – – – – – – 44
5.2 SUMMARY OF FINDING – – – – – – – 44
5.3 CONCLUSION – – – – – – – – 45
5.4 RECOMMENDATION – – – – – – – 46
5.5 SUGGESTION FOR FURTHER STUDY – – – – – 47
BIBLIOGRAPHY – – – – – – – – 48
CHAPTER ONE
1.1 INTRODUCTION
The Doctrine of Uberrima Fides in a Fidelity Guarantee Insurance Companies is located within the whole countries in the world. Insurance is an interesting discipline. It takes away the worries of risk takers just for a premium which is an insignificant proportion of the sum assured because of the law of large numbers. Investors who are not risk averse enjoy greatly as they often hedge their undertakings against the unforeseen which may be an accident, loss of income, incapacitated or even death. Here lies the beauty of insurance. Insurance has the capacity of restore the insured to his or her original financial state before the occurrence of the unexpected event. It is not designed to enrich the insured but to protect an insurable interest that he or she has in an asset. One fact that drives the insurance business is the concept of utmost good faith. As an insurer, broker, agent etc. you must be open and transparent in your dealings. The terms of the contract document must be simple and easily understood by the policy holder to win the insured confidence particularly because what is being sold is just an intangible service as an insurer or a prospective policy holder, your must not hoard information. Both the risk taken and the policy holder must be on the same page of the transaction where there is no meeting of the minds there cannot be a legally enforceable insurance contract. Therefore, claims can rightly be repudiated by the insurer if the information provide by the insured is found to be untrue. Thus the key word is fidelity trustworthiness, loyalty and commitment to a course.
1.2 STATEMENT OF PROBLEM
In law of contract, the general rules are that a contracting party is under no obligation to disclose material factors known to him to the other party. If the law of utmost good faith is not fully applied in the contract of insurance at the inception, during the time of loss and claim, the settlement will not be favourable to both parties to the contract. Literally, good faith mean’s dealing fairly or honestly with your neighbour. The doctrine of utmost good faith which is a major principle in an insurance contract in determining the confidence and loyalty of the public or to the industry has been seriously criticized for its inherent defects.
This is due to the fact that the insured will not be satisfied when some clauses are forwarded by the insurer which gives him the right to avoid paying claims. Another problem is when the insured is ignorance of some term and conditions of the contract which they are entering into, due to communication link and which are relevant and can render the contract void if breached. Problem may arise when the parties entered into a contract that is enforceable at law.
Failure of loyalty at the inception of the contact may give rise to fraud.
1.3 PURPOSE OF STUDY
This research work would focus on the effects of the principle of utmost good faith (Uberrima Fides) in fidelity guarantee. As regards to how claims are being settled between the tip contracting parties.
The research project would help in providing solution to the questions. Is utmost good faith the most viable principle in an Insurance contract or not?
Is all fact termed to be material must be included in the proposal form? Is the duty applied only to the insured or the both parties to the contract? The loyalty to perform duty is it a legal doctrine. The project is aimed at achieving certain objectives which includes the following to make true statement in negotiations with the proposer to issue the policy in unambiguous terms not to accept unenforceable at law.
It is intended to provide relevant information to prevent or prospective investors’ insurer and the general public.
It is aimed at educating and enlighten in the general public about the present sib rate of fidelity guarantee.
It is aimed at contributing to knowledge and would be relevant to those who in future intend to do research work.
Also to serve as an eye-opener to local insurer and the general public those who think that insurance business or companies are fluster’s, the if the loyalty to perform duty at the inception of the contract is fully obtain, both the insured and the insurance company or insurer will benefit from the contract.
1.4 RESEARCH QUESTION
The term research refers to a planned attempt to provide answers to questions or problems.
Answer to problem resulting from research is important in advancing knowledge, for understanding the environment human relationship and for promoting progress.
It is against these aforementioned points that this research attempts to provide solutions to the subject matter.
The principle of utmost good faith in an insurance contract has generated a lot of attention among the insured and the insurer for so many years. The following question shall be use in the course of this research study.
- What are the effects of utmost good faith in fidelity guarantee?
- What happens if the duty to disclose all material fact is not fully disclosed?
- The duty of disclosure is it mandatory to the insured or to both parties of the contract?
- Does the effects of utmost good faith in fidelity guarantee promote or bring progress into insurance company?
- Does loyalty or honesty in the effects of utmost good faith prevent fraud in Insurance business?
1.5 SIGNIFICANCE OF THE STUDY
This research work will be of good to the insurance industries in Nigeria, more especially the insurance companies in Rivers State.
This research project will be beneficial to people in the society who have the quest for more knowledge on the Effects of utmost good faith (Uberrima Fides) in fidelity guarantee.
It will also serve as frame work for scholars and students who are researching into similar topics, especially students of the Insurance department in Ken Saro Wiwa Polytechnic.
This study also intended to provide a yardstick for the managers and owners of insurance company in Nigeria. The Society at large and the buyers of Insurance Services, the benefit of Loyalty to perform a duty.
1.6 COPE/DELIMITATION OF STUDY
The scope of this study “The Effects of Utmost Good Faith Uberrima Fides” in Fidelity Guarantee is limited to a few certain selected insurance companies in Port Harcourt as the whole insurance companies or industries cannot be covered.
The most limiting factor encountered in course of carrying out this research work was lack of fund. Also the time duration required for the completion was too short; hence not encouraging sourcing of material was a difficult task due to the fact that some material were not available at the time of writing.
1.7 DEFINITION OF TERMS
- Contract: an agreement enforceable at law between two or more parties.
- Fidelity Guarantee: the faithfulness or honest to perform a duty.
- Insured: the policy holder or other person who is indemnified under a policy of insurance.
- Insurance: is defined as an agreement by which an insured transfers his risk (uncertain tendency to loss) to the insurer at an adequate fee called premium, on the promise that the insured shall be indemnified or compensated upon the occurrence of the insured event.
- Premium: this is the monetary consideration paid by the insured to the insure for an agreement of the insurer to indemnify the insured at the time of loss.
- Proposal Form: the form on which a proposal for insurance on the particulars of the insured property is made to an insurer.
- Utmost Good Faith: the duty which rest on both parties to an insurance contract, to make full disclosure of all material facts.
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