A Criterion for Identifying Good Faith of Insurer and Insured in Insurance Contract

The parties to the contract must have good faith in their all statements and also avoid the silence which leads to the misrepresentation of the other party. What the insured asserts must be effective on the premium and the insurance subject. Informing the insurer must be done with complete and accurate answers to the questions mentioned in the insurance proposal.The Insured can not insure all potential risks that threaten the subject of contract. In this case, there are some exceptions like deliberate loss. Insurer must have good faith in arranging the proposal and contract and avoid deceiving the insured by limited and ambiguous proposal. In the situations that insurer knows the bad faith and non accuracy of the assertions and expressions of the insured party, can not invoke to this bad faith in the court. In the time of concluding the contract, that is possible that the insured party intends to insure his or her properties with a higher value than real (deliberately or unintentionally), if this misrepresentation is done in a deliberate situation, then the contract is void and if these false statements are expressed unintentional, the contract is not void, so it is valid. The insured obliges to inform the insurer in the case of risk intensification or changing the insurance subject's situation. But unfortunately in Iranian law, there is no remark about informing the insured in the case of risk mitigation, which has benefit for the Insured.