Insurance Contract Question and Answer

Beatie Osolika took a fidelity medical policy with Hope Insurance Company Ltd. While completing the proposal form, Beatie Osolika answered in the affirmative a question by the insurance company asking “are you pregnant?” Four months later, Beatie Osolika was admitted to the insurance company’s designated hospital where it was established that Beatie Osolika was a man and he had never been pregnant. Hope Insurance Company Ltd. has since refused to settle Beatie Osolika’s medical bill, and Beatie Osolika intends to sue Hope Insurance Company Ltd. for payment.
Analyse the legal principles applicable in the above case and advise Beatie Osolika.

Solution

Legal principles in Beatie Osolika’s Case:-

• Insurance contracts are contracts of utmost good faith,
• The insured must faithfully disclose all facts known to her/him so that the insurer can decide whether to insure or not.
• Beatie Osolika committed fraudulent misrepresentation when he lied about his pregnancy status
• Misrepresentation does not render the contract void but the party misled will be able to avoid liability on the contract by proving that the misrepresentation was of a material fact.
• Hope Insurance Company can escape liability by relying on misrepresentation of Beatie Osolika’s health status which misled them to enter into the insurance contract.
• The medical cover was based on fidelity/utmost good faith (as a fundamental fact).
• Beatie Osolika cannot successfully sue.