Harish took a fire insurance policy of Rs 20 Lakh for his factory at the annual premium of
Rs 24,000. In order to avoid higher premium, he did not disclose that a highly explosive chemical
is being used in his factory . Due to an accidental fire, his factory gate severely damaged . The
insurance company refused to pay the claim as it came to know about the fact. Is company
justified in doing so? Also state the principle of insurance involved here.

Explanation

No, Violation of Utmost Good Faith .