unit2 Flashcards
what 5 elements must be present to form a valid legal contract?
CLOAC Consideration Legal purpose Offer Acceptance Comptent Parties
meaning or consideration
exchange of value. each party gives something of value.
Meaning of legal purpose
doesn’t violate the law
acceptance of an offer must be what two things?
unconditional and unqualified
requirements for a binding contract?
competent parties, and legal age
Aleatory
not equal in value
the value received from the contract by each party is unequal due to uncertainty of events.
what is meant by utmost good faith
both parties promise to be honest.
meaning of indemnification
restore an insured person to their pre-loss financial state
indemnity
pay for the loss with no gain . no more, no less
what is a representation?
a statement that the applicant believes to be true.
what are representations?
statements made on an application by the insured
what is a material misrepresentation?
false information that was a determining (or material) or factor in the insurer’s decision to accept the risk
in order to void a contract misrepresentations must be what?
material (determining factors for insurer in deciding to accept risk)
misrepresentation
information given that is not true but would not affect the insurance company decision.
what is a warranty
statement guaranteed to be true. usually made by insurance companies. they are made in the form of a promise
concealment
failure to disclose known facts
coverage can be cancelled due to what type of concealment?
intentional, and the info is material (important)
what is fraud?
intentional act to deceive and induce another party to part with something of value
waiver
intentional and voluntary giving up of a known right
estoppel
once a right has been waived it cannot be reinserted and used against the insured
3 factors of Adhesion
- Policy written by the insurance company.
- Contract is like glue.
- Insured has no input.
Unilateral
only one legally enforceable promise made. insurer can cancel at anytime
two conditional factors is a loss occurs
- insured must pay premium
2. claim must be filed
