An insurance contract is an agreement where each side promises to be truthful. This is referred to as:

In an insurance contract, the principle of utmost good faith requires both parties—insurer and insured—to be honest and transparent in their dealings. This principle is critical to the contract because it ensures that both sides fulfill their obligations based on complete and accurate information.

If the insured withholds material information or the insurer misrepresents the terms of the policy, it can lead to imbalances and disputes later on. Therefore, this obligation is foundational to maintaining trust in the relationship between the insurer and the insured. The concept underscores that insurance contracts are not just legal agreements but also rely heavily on the integrity and honesty of the parties involved.

Other options may contain relevant terms related to contracts but do not specifically capture the essence of the mutual obligation of honesty required in insurance agreements. For instance, warranties typically pertain to specific assurances or guarantees made within the contract rather than the broader expectation of honesty.