What principle does an insurance policy rely on regarding the relationship between the insured and the insurer?

The principle of good faith, also known as "uberrima fides," is a fundamental concept in insurance contracts. It refers to the expectation that both the insured and the insurer will deal with each other honestly and fairly. This principle emphasizes that the insured must disclose all relevant information that could impact the risk assessment, while the insurer, in turn, must not mislead or deny coverage without valid justifications.

Maintaining good faith ensures that the contract is based on mutual trust, which is crucial for the effective functioning of insurance. If either party fails to uphold this principle, it can affect the validity of the insurance policy and could lead to disputes or denial of claims. This contrasts with other options, such as the notion that contracts must be in writing (which is more about formality than the fundamental nature of the relationship) or that legal representation is necessary (which is not always obligatory). Additionally, suggesting that policies must cover all risks misunderstands the nature of risk management in insurance, where specific exclusions are frequently part of policy design to limit the insurer's exposure.