What principle ensures that both parties in an insurance agreement must act honestly and not hide information?

The principle that ensures both parties in an insurance agreement must act honestly and not conceal information is known as utmost good faith. This principle requires that both the insurer and the insured engage in a relationship built on trust and transparency. It reinforces the idea that both parties have a duty to disclose all relevant facts that could affect the insurance agreement.

In insurance contracts, the insured must provide all material information related to the risk being covered, as failing to do so could lead to a breach of contract. Similarly, the insurer must act fairly and provide all necessary disclosure regarding the terms and limitations of the policy. This mutual obligation is essential in maintaining the integrity of the insurance process, as it ensures that both parties operate under a shared understanding of the risks involved and the specifics of the coverage.

The other options provide different concepts related to insurance but do not encapsulate the mutual obligation of honesty and full transparency central to the principle of utmost good faith.