CH2 Policy Provisions & Contract Law

Question 1

Four essential elements of a legal contract

Answer 1

Offer & Acceptance
Consideration
Competent Parties
Legal Purpose

Question 2

Agreement

Answer 2

Offer & Acceptance

Question 3

Consideration

Answer 3

Premiums and representations on the part of the policyowner; payment of claims on the part of the insurance provider.

Question 4

Competent Parties

Answer 4

Legal age, sound mental capacity and no alcohol or drugs

Question 5

Legal Purpose

Answer 5

Must be for a lawful reason, not against public policy

Question 6

Representations

Answer 6

Statements believed to be true to the best of one’s knowledge, but they are not guaranteed to be true.

Question 7

Misrepresentations

Answer 7

Untrue statements that may void the contract

Question 8

Material Misrepresentations

Answer 8

Statement, that if discovered, would alter the underwriting decision of the insurance provider

Question 9

Warranty

Answer 9

Absolutely true statement that the insurance policy depends on in order to be vaild.

Question 10

Concealment

Answer 10

Intentional withholding of information of a material fact that is critical in making a decision and could void a policy.

Question 11

Binders

Answer 11

Temporary agreement issued by an insurer or agent providing temporary coverage until policy can be issued.

**Expire when the policy is issued