The validity of a car insurance contract is measured against certain legal terms – two of the most important being urberrima fides (in good faith) and the reasonable man test. The reasonable man test is now widely accepted as the true test of validity in insurance business. The reasonable man test states that it can be demanded of a person looking for car insurance (the proposer) to provide the insurance company with all the applicable information that any reasonable man would see as being important information (material facts) with reference to the item of insurance.

The test here is that, should a case go the court, would a reasonable man have thought that the information under question would be of material value to the risk? Saying that you did not think the information was important will not be an acceptable defence. Finding a clear definition of a reasonable man is no easy task but the opinion of someone with some tertiary education and an average intelligence has been accepted as a fair definition. You therefore do not need to have expert car insurance knowledge to pass the reasonable man test. An example will be that a reasonable man will declare to the insurance company that he often drives in high risk areas because of the nature of his work; this could have a direct influence on his car insurance premium.