Q.The principle that requires a person seeking an insurance policy to disclose every material fact relevant to the risk, honestly and completely, even without being specifically asked, is called:
(A) Indemnity
(B) Utmost Good Faith
(C) Subrogation
(D) Contribution

Insurance departs from the ordinary "let the buyer beware" rule by requiring full, honest disclosure of every material fact from the proposer, even unasked.

Match each option against whether it concerns disclosure of facts, the amount payable on loss, or recovery from a third party.

Insurance contracts depart from an ordinary commercial contract's "let the buyer beware" rule and instead require the proposer — and the insurer — to disclose every fact material to assessing the risk, honestly and completely, even without being specifically asked. This is the principle of Utmost Good Faith (Uberrimae Fidei); concealing a material fact makes the resulting policy voidable at the insurer's option.

Option-by-option analysis:

• (A) Incorrect — Indemnity concerns the AMOUNT payable on a claim (limited to actual loss), not disclosure of facts before the contract is formed.
• (B) Correct — this is exactly the definition of Utmost Good Faith.
• (C) Incorrect — Subrogation concerns the insurer's right to recover a paid loss from a responsible third party, which arises only after a claim is settled.
• (D) Incorrect — Contribution concerns sharing a loss between multiple insurers covering the same risk, unrelated to disclosure of facts.