Contracts

Question 1

What are contracts?

Answer 1

Deliberate engagement
Legal consideration
Oral or written

Question 2

5 Essential Elements of Contracts

Answer 2

Offer and acceptance 
Capacity of other parties to contract
Consideration 
Genuine Intention
Legality of  object

Question 3

Additional Requirements for Insurance Contracts

Answer 3

Insurable interest
Indemnity
Utmost good faith

Question 4

Voidable Contracts

Answer 4

• Mistake
• Misrepresentation
• Undue Influence
• Duress

Question 5

The Insurance Acts require that the rules governing rights and responsibilities of all parties to the contract be part of every contract. These are:

Answer 5

Material Change in Risk
Prohibited use by Insured
Prohibited use by others
Requirements where loss or damage to persons or property
Requirements where loss or damage to the automobile
Inspection of automobile
Time and Manner of payment of Insurance Money
Who may give notice and proof claim
Termination
Notice

Question 6

Binding Authority

Answer 6

Authority given by an insurer to a broker to allow the broker to bind certain insurance coverage without first submitting an application for insurer approval.

Question 7

Limited Binding Authority

Answer 7

1) 2 + accidents or claims in past 3 yrs
2) A suspended or revoked Driver’s License within past 5 years
3) Auto Insurance previously cancelled or declined by insurance company

Question 8

No binding authority

Answer 8

1) Any risk where coverage or rates are not shown in the rate manual
2) Custom built / home built, snowmobiles, motorcycles
3) Autos insured for Stated Values