Chapter 3 Flashcards
Describes a contract that has been prepared by one party ( the insurance company) with no negotiation between the applicant and insurer. The applicant adheres to the terms of the contrac on a “take it or leave it” basis when accepted
Adhesion
Represents themselves and the insurer at the time of application.
Agent
Contract presents the potential for an enequal exchange of value or consideration between both parties. Contracts are conditioned upon the occurance of an event.
Aleatory
Is the appearance of the insurer providing the agent authority to perform unspecified tasks based on the agent-insurer relationship
Apparent Authority
Represents themselves and the insured (i.e., the client or customer) at the time of the application.
Broker
Is one who is capable of understanding the contract being agreed to. All parties must be of legal competence, meaning they must be of legal age, mentally capable of understanding the terms and not influenced by drugs or alcohol
Competent party
is the failure of the applicant to dislcose a known material fact when applying for insurance.
Concealment
Policy describes the insurer’s promise to pay benefits depends on the occurrence of an event covered by the contract
Conditional
is the part of an insurance contract setting forth the amount of initial and renewal pemiums and frequency of future payments.
Consideraton
Provide the insurer with a completed application and initial premium as consdieration for insurance.
Applicants
is the legal impediment to one party denying the consequences of its own actions or deeds if such actions or deeds result in another party acting in a specific manner or if certain conclusions are drawn.
Estoppel
is the explicit authority granted to the agent by the insurer, as wirtten in the agency contract
Express Authority
The responsibility an insurance producer has to account for all premiums collected and provide sound financial advice to clients. Is in a position of turst with regrds to the funds of their clients and the insurer.
Fiduciary
Includes the deliberate knowledge of the intentional deceit to make false statements to be compensated by an insurnce company.
Fraud
is an authority not explicitly granted to the agent in the contract of agency, but which common sense dictates the agent has. it enables the agent to carry out routine responsibilities.
Implied Authority
Attempt to return the insured to their original financial position
Indemnity contract
is the financial, economic, and emotional impact associated with a person experiencing a specified loss. A person has an insurable interest in a loss if they have more to gain by not suffering the loss.
insurable interest
is a written contract in which one party promises to indemnify another against loss that arises from an unknown event
Insurance Policy
means an insurance contract must be legal in nature and not in opposition to public policy
Legal purpose
is a false statement made by an applicant that would influence an insurer in determining whether or not to accept the risk
Material misrepresentation
involves parties put their agreement in writing, all previous verbal statements come together in that writing, and a written contract cannot be changed or modified by parol (oral) evidence.
Parole Evidence rule
is an amendment added to an insurance contract that overrides terms in the original policy; endorsements may add or remove coverages, change deductibles, or revise any other policy feature.
Policy rider or endorsement
means the insured is entitled to coverage under a policy that an sensible and prudent person would expect it to provide
Reasonable expectations
are statements made by the applicant that they consider to be true and accurate to be the best of the applicant’s belief
Representations
Is the right for an insurer to pursue a third party that caused an insurance loss to the insured
Subrogation
contract mean only one party, the insurer, makes any kind of enforceable promise.
Unilateral
involves the belief that both the policyowner and the insurer must know all material facts and relevant informaiton, and as such, they will provide each other with all material facts and relevant information
Utmost Good Faith
pays a stated sum regardless of the actual loss incurred. Life insurance contracts are valued contracts
Valued contract
is an agreement that, for a reason satisfactory to the court, may be set aside by one of the parties in the contract.
Voidable Contract
is the voluntary giving up of a legal, given right
Waiver
Is a statement made by the applicant that is guaranteed to be true in every respect. It becomes part of the contract and, if found to be untrue, can be grounds for revoking the contract
Warranty
