Lesson 1 Part 2 Flashcards
Contract
Agreement between 2 or more competent parties under the terms which each promises to perform in manner specified
4 components for contract to be legal and enforceable
1) Offer & Acceptance (Agreement)
2) Competent Parties
3) Legal Object (Purpose)
4) Consideration
Entities deemed incompetent for legal contract
Minors, Mentally incompetent individuals, those under influence of alcohol
Aleatory Contract
The value given up by one party does not equal that given up by the other party
Contract of Adhesion / One Sided Contract
Where one party creates the contract terms & the other party must comply with them
Courts interpret policies to include coverages that an average person would understand them to include
Doctrine of Reasonable Expectations
When a party does not enter into agreement in _____________, the other party may void contract.
Utmost Good Faith
Executory Contracts
Like an insurance policy, act in contract remains to be performed by one of the parties
Unilateral feature
Contract where only the insurer promises to perform; promise made by only one party
Contract subject to numerous conditions
Conditional Contract
Waiver
Intentional or voluntary relinquishment of a known right in an insurance contract
Estoppel
Where there is a form of broken promise from insurer who makes a statement and insured relies on statement, but later insurer doesn’t want to abide by original statement
3 required elements of estoppel
1) False representation of material fact
2) Reasonable reliance
3) Harm would result
Errors & Omissions (E&O) policies
Claims which result from negligent act(s) of a producer
4 parts that make up insurance contract
1) Declarations
2) Insuring Agreement
3) Conditions
4) Exclusions
Illustrations of conditions places upon insureds
1) Proof of Loss
2) Assistance of the insured
3) Insured duties in event of loss
4) Notice of loss
Modify policies insuring agreements to eliminate uninsurable perils or other coverages not under the term of contract; prevents duplication of coverage
Exclusions
Representation
Oral or written statements made by individual seeking to enter consideration contract
Warranties
Statements made by applicant regarding nature of the risk to be insured
Fraud
Intentional misrepresentation of material fact that may void a contract
Binder
Temporary policy that’s subject to terms of contract to be written later