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Flashcards in Contract Law Deck (38)
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1
Q

Contracts

A

Written agreements that are legally enforceable by law

2
Q

Law of contracts

A

A great deal of the law that has shaped the formal structure of insurance and influence its content is derived from the general law of contracts

3
Q

Tort

A

A tort is a private, civil, non-contractual wrong for which a remedy through legal action may be sought

4
Q

Intentional tort

A

Any deliberate act that causes harm to another person regardless of whether the offending party intended to injure the aggrieved party

5
Q

Unintentional tort

A

The results of acting without proper care this is generally referred to as negligence

6
Q

Four elements of a contract

A

Agreement :offer and acceptance
Competent parties,
legal purposes,
consideration.

7
Q

Agreement: offer and acceptance

A

There must be a definite offer by one party and the other party must accept this offer and it’s exact times. In insurance the applicant usually makes the offer when submitting the application.

8
Q

Consideration

A

The binding force in any contract is the consideration. Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and there is representations made in the application. The consideration on the part of the insurer is the promise to pay an event of a loss.

9
Q

Competent parties

A

The parties to a contract must be capable of entering into a contract in the eyes of the law. Generally this requires that both parties be of legal age, mental competent to understand the contract, and not under the influence of drugs or alcohol.

10
Q

Legal purpose

A

The purpose of the contract must be legal and not against public policy. To ensure legal purpose of a life insurance policy, for example, it must have both: insurable interest and constant. A contract without a legal purpose is considered void, and cannot be enforced by any party.

11
Q

Acceptance

A

Acceptance takes place when an insurance underwriter approves the application issues a policy.

12
Q

Contract of adhesion

A

Prepared by one of the parties (insurer) and excepted or rejected by the other party (insured). Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. In other words, insurance contracts are offered on the take it or leave it basis by insurer.

13
Q

Conditional contract

A

Requires that certain conditions must be met by the policy owner and the company in order for the contract to be executed, and before each party fulfills its obligations. For example, the insured must pay the premium and provide proof of loss in order for the insurer to cover a claim.

14
Q

Aleatory

A

Which means there is an exchange on equal amounts or values. The premium paid by the insured is small in relation to the amount that will be paid by the insurer in the event of loss

15
Q

Unilateral

A

Only one of the parties to the contract is legally bound to do anything. The insured makes no legal binding promises. However, an insurer is legally bound to pay losses covered by a policy in force.

16
Q

Personal

A

it is between the insurance company and an individual. Because the company has a right to decide with whom it will and will not do business, the insured cannot be changed to someone else without the written consent of the insurer, nor can the owner transferred the contract to another person without the insurers approval.Life insurance is an exception to this rule a policy owner can you transfer ownership to another person however that insurer must still be notified in writing.

17
Q

Insurance policy

A

The insurance policy is the written instrument in which a contract and insurance is set forth.

18
Q

Representations

A

Statements believe to be true to the best of one’s knowledge, but they are not guaranteed to be true. For insurance purposes, presentations are the answers the insured gives to the questions on the insurance application.

19
Q

Misrepresentations

A

Untrue statements on the applications are considered misrepresentations and could void the contract.

20
Q

Material misrepresentation

A

A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company. Furthermore, if material misrepresentations are intentional they are considered fraud.

21
Q

Warranty

A

Is a statement considered to Be guaranteed to be true and becomes part of the contract.

22
Q

Materiality

A

The concept of materiality is based on the idea that all parties into a contract are entitled to all information necessary to make an informed decision about the quality or nature of the contract.

23
Q

Concealment

A

The legal term for the intentional withholding of information of a material fact that is crucial in making a decision.

24
Q

Information that does not need to be communicated in a contract

A

Known information,
Information that should be known
Information that the other party waves
Information that is excluded by a warranty and not material to the risk
Information that is expected that from insurance and that material to the risk
Information based on personal judgment

25
Q

Rescission

A

The revocation of a contract

26
Q

Application

A

A written request for coverage to the insurance company

27
Q

Policy

A

A contract between the policy owner and an insurance company which agrees to pay for the loss caused by specified covered events.

28
Q

Riders

A

Are added to a policy to modify provisions that already exist.

29
Q

Endorsements

A

Are printed addendums to a contract that are used to change the policies original terms, conditions, or coverages.

30
Q

Cancellation

A

The act of revoking or terminating ones insurance policy

31
Q

Lapsed policy

A

A policy that is terminated because of nonpayment of premiums

32
Q

Renewal

A

The continuance of an insurance policy beyond its original term

33
Q

Non-renewal

A

Is the discontinuance of an insurance policy beyond its original time.

34
Q

Grace period

A

Is the period of time after the deadline I do date of a premium in which a late premium payment may be made without penalty, or without the policy lapsing.

35
Q

Rate

A

The price of insurance for each exposure unit

36
Q

Premium

A

Is the payment required by the insured to keep the policy in force. The premium is determined by multiplying the rate by the number of insurance purchased

37
Q

Earned premium

A

The portion of a premium that belongs to the insurance company for providing coverage for a specific period of time

38
Q

Unearned premium

A

Is the portion of the premium insurance company has collected but has yet to earn because it has not yet provided coverage for the insured.