On the basis of the answers given to the questions in the proposal form the underwriters will decide a fair premium for the policy that the proposer wishes to take out. It should be noted that one part of the proposal form is a declaration signed by the proposer to the effect that he warrants the truth of the statements made. This warranty reinforces his common-law duty to show the utmost good faith with a contractual duty to have told the truth in every particular. This contractual duty is even more strict than the common-law duty, since any inaccuracy makes the contract voidable, whether or not it relates to a material fact. A material fact is defined as one which will influence an underwriter in entering into, or fixing the premium for, a contract of insurance. This declaration is the basis of the contract of insurance. It is incorporated in the offer of the Insurance Company to insure the proposer for a certain sum of money called a premium. The person desiring insurance can accept this offer by paying the premium, whereupon commences, and a policy will be issued giving a full account of what has been agreed.
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