Study 6 Flashcards
A ______ is an agreement enforceable at law
Contract
Under common law, the following conditions must exist or the contract is void
Genuine Internet Legal Capacity Legality of purpose Agreement Consideration
To be legally effective, consideration must contemplate the following three things
- It must have a price
- It must have some value
- It must be in the present or future
The following persons have limited ability to contract legally
- Infants or minors
- Insane or mentally incompetent
- Intoxicated persons
For a contract to be enforceable it must be a lawful purpose. It is unenforceable and void if it is any of the following:
- Forbidden by law
- Against public policy
- For the purpose of commutating a crime
when more then one policy has been issued to insure a given risk, a loss must be divided equitably among the various policies. According to their amount and terms, each “Contributes” its share of the loss
Contribution
Contribution Calculation =
Amount of coverage / Total combined coverage X amount of loss = ratable portion
Insurance that does not participate until all other similar insurance on the same subject is exhausted, or until loss exceeds the previously agreed upon amount
Excess Insurance
A fact that would affect a contract of insurance enough to influence an insurers decision
Material Fact
A material fact if known would affect insurers when deciding the folloing
the acceptability of risk, the amount of premium to be charged and the conditions applicable to accepting the risk
an incorrect statement made about a material fact. It can also be an omission of certain facts
Misrepresentation
what are three types of misrepresentation
- Innocent - an oversight
- Fraudulent - an outright lie intended to mislead or hide
- One of extreme carelessness - statement made with no regard to weather is be true or false
Silence when there is an obligation to speak is known as
Non-Disclosure (Concealment)
With holding information pertinent to the risks
Non-Disclosure (Concealment)
What are the two time periods to disclose Material Facts
- Facts as they exist up to the time the contract is formed
- New facts that arise
What is needed for an offer to become and agreement “Meeting of the Minds”
acceptance of the offer
A contract that was never made and never existed
Void Contract
Three Requirements of a Insurance Contract
Insurable Interest
Indemnity
Utmost Good Faith
“No more and No less”
Indemnity
Policy wording that does not conform to the standard wording in general use within the insurance industry and that is unique to the policy involved
Manuscript Wording
A short term certificate issued at the renewal
Renewal Certificate
A ___________ will overrule any wording in the policy itself that is inconsistent with the endorsement, unless an express stipulation to the contrary is included
Endorsement
What could the affects of misrepresentation lead to
Void contract
A policy covering a risk that is divided among a number of insurers; the policy is issued by the “Lead” company and signed by all participating companies
Subscription Policy
A temporary confirmation that coverage is in effect given to the insured - which can be oral or written
Binder
True or false the premium is shown on Binders
False
A temporary confirmation that coverage is in effect given to the insurer
Cover Note
True or false the premium is not shown on Cover Notes
True
Five main sections of a policy
Coverage Summary Insuring Agreements Statutory Conditions (QC General Conditions) Policy Conditions Signature Clause
This section of the policy sometimes referred to as declarations , contains the parties of the contract (insured and insurer), The commencement date, Term, Expiry date, The premium and rate, and the amounts insured
Coverage Summary
This section of the policy states the following: the subject matter of the insurance - Description of property covered. The perils covered against. the exclusions and the circumstances under which the insured may receive the proceeds of the insurance
Insuring Agreements
This clause states that the policy is to be signed by the insurer only and is one of the sections of the policy
Signature Clause
Insurer cancellation of policy - cancellation of policy with the return premium credit being the full proportion of premium for the unexpired term of the policy
Pro rata Cancellation
Insured Cancellation of policy - cancellation of policy before its natural expiration, the insurer pays a return premium less the penalty
Short rate Cancellation
