Legal Concepts Of Insurance Flashcards
What is a contract of adhesion?
A contract of adhesion is one that has been prepared by one party (the insurance company) with no negotiation between the applicant and insurer. The applicant adheres to the contract terms on a ‘take it or leave it’ basis when accepted.
(See Rule Regarding Ambiguities)
Who is an agent in insurance?
An agent is the person who represents the insurer during an insurance transaction and has been authorized to act on the insurance company’s behalf. Agents have a fiduciary responsibility to both parties—the insurer and the policy owner.
What does aleatory mean in insurance?
Aleatory is a legal arrangement in which there’s the potential for an unequal exchange of value or consideration between both parties. The insured may never file a claim in an insurance contract, or a claim may be filed after only one or two premiums.
What are ambiguities in an insurance contract?
Ambiguities refer to terms or conditions that are not clearly defined in an insurance contract.
(See Adhesion)
What is apparent authority?
Apparent authority is the appearance of the insurer providing the agent authority to perform unspecified tasks based on the agent-insurer relationship. This perception of authority must stem from the insurer’s actions, even if the perception is unintended and in error.
What is a broker in insurance?
A broker is a licensed producer who represents himself and the insured (i.e., the client or customer) during an insurance transaction. A broker doesn’t hold an appointment with the insurer in question and cannot bind coverage on behalf of the insurer.
What is a competent party?
A competent party is a person who’s able to understand the contract to which two parties are agreeing. All parties must be of legal competence, meaning they must be of legal age, mentally capable of understanding the contract terms, and not under the influence of drugs or alcohol.
