Change in Duty of Utmost Good Faith in General Insurance

Abstract

A general insurance contract is a contract that requires utmost good faith, especially from the Insured. This principle is a principle of insurance contracts in all countries that have insurance businesses and insurance law. For Thailand, as provided in the Civil and Commercial Code, Section 865, the first paragraph, specifies two important duties of the Insured which are duty of disclosure and duty of non-misrepresentation which means the duty of the Insured to disclose the fact which is the material of the risk of the Insurer which may lead the Insurer to propose higher premiums or may cause the Insurer to refuse to enter into the contract. In this regards, the person who has duty to represent the statement must know the truth before or at the time they entering into a general insurance contract. If there is a breach of the duty, Section 865 stipulates that such insurance contract becomes voidable. The Insurer may exercise the right to void the contract.

            The principle of utmost good faith of the foreign laws has changed by separating the duty of the Insured between the consumer insurance contract and the commercial insurance contract. Also clearly imposes the duty of utmost good faith to Insurers to have a duty to ask a specific question about what the Insurer wants to know and follow up for answers that were not clear. A duty to inform the Insured about the consequences if the Insured breaches the duty. The duty of disclosure about insurance products via documents. Insurers who do not perform their duties will be considered dishonest parties and will not be able to rely on such fact to avoid the contract. Therefore, it is clear that the duty of utmost good faith is widened and no longer limited to the duty of disclosure and non-misrepresentative. The change including result of a breach by an Insured, the result may depend on an intentional act or gross negligence of the Insured.

            Since the insurance law has the similar principle in most country. But nowadays in Thailand, there is no clarity about the duty of utmost good faith of Insurers. The author then proposed to amend the Civil and Commercial Code and General Insurance Act to specify the duty of utmost good faith of the Insurers. Specifically, on duty of utmost good faith in underwriting, set out the rule to determine which facts do not require to disclose by Insured, duty of Insurers to provide a proper warning of the duty of utmost good faith to the Insured and proposes to amend the result of breaches of the duty of utmost good faith by Insured for the court can protect the Insured in cases where breach of the duty does not due to willful or gross negligence.