The Insurance Contract Flashcards
What are the four characteristics an insurance contract must have to be legally enforceable?
To be legally enforceable an insurance contract must have competent parties, legal purpose, offer and acceptance, and consideration.
What is a contract?
A contract is a legal agreement between two competent parties that promises a certain performance in exchange for a certain consideration.
What are competent parties?
A contract is not valid unless it is made between two parties who are considered competent under the law.
What is it legal purpose?
A contract must be formed for a legal purpose it cannot be against public policy or against the law.
What is offer and acceptance?
A contract involves two parties, one who makes an offer and one who accepts it.
What is consideration?
Consideration is a thing of value exchange for the performance promised in the contract. With insurance, the consideration that the insured gives is the premium payment. The consideration at the insurer gives is the promise to pay for certain losses suffered by the insured.
What is the principle of indemnity?
The principle of indemnity states that when a loss occurs, an individual should be restored to the approximate financial condition he was in the before the loss, no more and no less.
In what way is an insurance contract a personal contract?
An Insurance contract does not insure property, it insures the person who owns the property.
What is aleatory?
It is contingent on an uncertain event ( a loss ) that provides for unequal transfer of value between parties.
In what way are insurance contracts adhesion contract?
One party has a greater power over the other party in drafting the contract.
What is the Doctrine of Reasonable Expectation?
The doctrine of reasonable expectation states that a policy includes coverage is that an average person would reasonably expected to include, regardless of what the policy actually provides.
What does unilaterally mean?
Unilateral means one sided.
In what way is an insurance contract unilateral?
Insurance policy is one-sided because legally only insurance company is down before it’s part of the agreement.
In what way is an insurance contract a contract of utmost good faith?
The insurance company relies on the truthfulness and integrity of the applicant when issuing a policy. In return, the insured relies on the company’s promise and ability to provide coverage and pay claims.
How is an insurance policy a conditional contract?
And insurance policy includes a number of conditions double the insured in the insurer must comply with.
