Utmost Good Faith, Insurable Interest & Indemnity

Duty of disclosure, non-disclosure vs misrepresentation, financial interest, and exact compensation rules.

Target: EPFO APFC 2026•Topic-Level RAG Context Active•Model: Nemotron 3.5 Lightning 30B / 120B

Topic Overview

Duty of disclosure, non-disclosure vs misrepresentation, financial interest, and exact compensation rules.

Key Syllabus Concepts

Uberrimae Fidei (Utmost Good Faith): Material facts disclosure requirement by both insured and insurer
Insurable Interest: Must exist at time of contract (Life) or both contract & loss time (Fire/Marine)
Principle of Indemnity: Insured is restored to exact financial position before loss (Applies to General Insurance, NOT Life/Personal Accident)
Principle of Subrogation: Insurer steps into insured's shoes to recover damages from third party after settling claim
Principle of Contribution & Proximate Cause (Causa Proxima)

High-Yield Important Points & Rules

💡 Life insurance and Personal Accident insurance are NOT contracts of indemnity.
💡 Insurable interest in Life Insurance must exist at the time of taking the policy.

Historical UPSC EPFO PYQ Relevance

3 Matched PYQs

2025•EPFO APFC•General Ability Test• Q.83

Full Question

Mr. X earns wages of ₹20,000 per month. What will be the contributions to the ESI Scheme under the Employees' State Insurance Act, 1948?

2025•EPFO APFC•General Ability Test• Q.84

Full Question

Which one of the following is not a benefit provided to an employee under the Employees' State Insurance Act, 1948?

2025•EPFO APFC•General Ability Test• Q.106

Full Question

In case of contract of insurance, the principle which states that it is the duty of the insured to take reasonable steps to minimize the loss or damage to the insured property is called:

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