Policy Provisions & Contract Law Flashcards
In property and casualty policies, what is required for an assignment to be valid?
A written consent of the insurer
In commercial property policies, who has control of the policy, and who can cancel it?
First named insured
What are the four elements of an insurance contract?
Agreement (offer and acceptance)
Consideration
Competent parties
Legal Purpose
When is an appraisal needed and how can it be requested?
If an insured and an insurer disagree about the value of a property loss, either party can make a written demand for an appraisal.
What does the term unilateral contract mean?
A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise.
Information about changes to the policy or return of premium can be found in what section of a policy?
Conditions
In insurance contracts, when does acceptance usually occur?
When the insurer approves a prepaid application
What is additional coverage in an insurance policy?
A provision that adds more coverage for a specific loss at no additional premium.
In insurance contracts, when is the offer usually made?
When the insurance application is submitted
What is consideration in an insurance contract?
Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.
What does the exclusions section of a policy specify?
What perils are not insured against, or what persons are not covered in a policy.
What is a warranty in an insurance contract?
An absolutely true statement upon which the validity of the policy depends.
What part of a policy shows the amount of insurance, premium, and policy terms?
Declarations
What process is used to settle a casualty claim when the insured and the insurer cannot agree?
Arbitration
What is a binder?
A temporary insurance contract that goes in effect prior to the policy issue
What provision defines how a policy will respond if there is more than one insurance policy written on the same risk?
Other insurance
What is the difference between cancellation and nonrenewal?
Cancellation is the termination of an insurance policy by either party prior to the policy’s expiration date. Nonrenewal is the termination of a policy at its expiration date by not offering a continuation of the existing policy.
When does pro rata liability apply?
When an insured has more than one policy covering a loss
What are an insured’s duties after loss?
Protect the damaged property from further damage, prepare an inventory of damaged property, cooperate with the insurer in settling loss, notify police in case of theft; and submit proof of loss.
What is consideration on the part of the insurer?
A promise to play in the event of a loss
What is proof of loss?
A sworn statement from an insured notifying the insurer about a loss
Who is an insured in property and casualty insurance?
Anyone covered under the policy, even if not specifically named.
Which method of loss valuation is contrary to the principle of indemnity?
Replacement cost
Persons who are not named on the declaration page of a policy but who are protected by the policy are known as what type of insured?
Additional insured
