Chapter 6: Basic Legal Principles and Contract Analysis Flashcards

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1
Q

Elements of an enforceable contract

A

1) Offer and acceptance
2) Must have a legal purpose
3) Competent Parties
4) Consideration

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2
Q

Unilateral

A

Only one party, the insurer, can be held liable.

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3
Q

Personal

A

Covers an individual a person

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4
Q

Conditional

A

Only the insurer has a obligation to meet conditions

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5
Q

Contract of adhesion

A

The contract was prepared by one party. The other party can only accept or reject a contract.

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6
Q

Contracts of indemnity

A

policy owner is entitled to payment of an amount directly related to the amount of a loss. Applies primarily to property insurance.

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7
Q

Valued Contracts

A

Policy owner is entitled to recover the amount specified in the policy.

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8
Q

Insurable interest

A

right or relationship with regard to an insurance contract such that the policy owner will suffer a finical loss from the damage, loss, or destruction to that subject matter. Insurable interest has to exist at the time of purchasing the policy.

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9
Q

subrogation

A

A process by which an insurer takes over the legal rights of recovery its insured has against a responsible 3rd party.

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10
Q

Concealment

A

The failure to disclose relevant information. Usually occurs at time of application.

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11
Q

Void contract

A

A contract that has no legal effect.

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12
Q

Fraud

A

Must include:

false representation of a material fact that was knowingly made to influence or deceive.

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13
Q

Declarations

A

Factual statements that identify the parties to the insurance transaction, the amount of insurance, the property or activity being covered, the effective date of the coverage etc.

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14
Q

insuring agreements

A

The promises made by the insurer.

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15
Q

Conditions

A

Duties that usually the policy owner must fill before it can hold the other party to the terms of the contract.

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16
Q

Is an insurance contract unilateral or bilateral

A

An insurance contract is a unilateral contract.

17
Q

Parol Evidence Rule

A

A legal principal that specifies that oral contemporaneous evidence may not be used to contradict or vary the terms of a valid written contract

18
Q

Principle of indemnity

A

Legal principal that the purpose of insurance is to indemnify (financially compensate) people entitled to insurance benefits in an attempt to make them financially whole. however people should not make profit from an insured’s loss.