Unit Cards

Question 1

what is a contreact?

Answer 1

a contreact is a legal agreement between two competent parties that promises a certain performance in exchange for a certain consideration

Question 2

a contract can be what?

Answer 2

oral or or written. usually written

Question 3

what are the characteristics or a legally enforceable insurance contract? and the acronym?

Answer 3

CLOC.
C - Competent parties (over 15 not drunk etc..)
L - legal purpose
O - Offer and acceptance (agreement)
C - Consideration

Question 4

what is legal purpose in CLOC mean?

Answer 4

one that is not against public policy (hurts the public) or in violation of the law
ex. really it is like if you have an illegal deal with a theief who steals things and gives you half .. you can’t take him to court)

Question 5

what is offer and acceptance (O) in CLOC?

Answer 5

contract invlves two parties (one who make an offer and one who accepts it.) aka. an agreement
- when someone does an application for example. a life app. they are making an offer to the insurance company
- ultimately leads to “meeting of the minds” (they may say that and you must know it means offer and acceptance)

Question 6

what does the last letter C mean in CLOC?

Answer 6

consideration is the thing of value exchanged for the performance promise in the contract.
ex. exchanging an act (paying a premium) for a promise of insurance company to pay should something happen
AKA an agreement

Question 7

what is principle of indemnity?

Answer 7

making something the same and restoring it back to original place prior to loss. no better or worse
- insured may only be brought back to financial condition they were in before loss

Question 8

What are the 3 things about insurance contracts?

Answer 8

THey are

1. personal
2. adhesion
3. unilateral

Question 9

What is the adhesion characteristic of an insurance contract?

Answer 9

means take it or leave it. one sided in regards to preparation. prepared by the insurance company and offered to them. they can either sign it or be done

Question 10

what is the personal characteristic of an insurance contract?

Answer 10

its always on a person never on a thing.thing is a subject of insurance = homewoners. insure the homeowner not the home.

Question 11

what is the unilateral characteristic of an insurance contract?

Answer 11

means “one=sided” bc only insurance company is legally bound to cover their side of the agreement. meaning if you pay your premiums they have to cover you but you can stop paying premiums at any time.

Question 12

adhesion + unilateral all mean what?

Answer 12

one sided

Question 13

what 5 parts do an insurance contract entail? what is the acronym for them?

Answer 13

DICED
D - declarations
I - Insuring Agreements
C - Conditions
E - Exclusions
D - Deinitions

Question 14

what is the first part of an insurance contract? what does it mean?

Answer 14

DICED
Declarations - list who, what, where when, and how much

Question 15

what is the second part of an insurance contract? what does it mean?

Answer 15

Insuring agreements. defines, describes, details, explains the policy by what is covered. the “heart” of an insurance policy

Question 16

what is the third part of an insurance contract? what does it mean?

Answer 16

conditions - state the “ground rules” for the policy. describe what both parties must do for contract. ex. one pays premium the other does something else

Question 17

what is the fourth part of an insurance contract? what does it mean?

Answer 17

exclusions - describes the losses for which the insured is not covered

Question 18

what is the 5th part of an insurance contract? what does it mean?

Answer 18

definitions - clarifies the meanings of certain terms used in the policy

Question 19

What is the breakdown of this chapter when it comes to contract construction?

Answer 19

1. What are the conditions/elements needed for a contract to be legit? (CLOC)
2. In the legit contract, what are the components? (DICED)
3. What are the characteristis of an insurance contract?