General Insurance Principles - Insurance Contracts Flashcards Preview

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Flashcards in General Insurance Principles - Insurance Contracts Deck (17):
1

What are the elements of a legal contract?

1.) Offer
2.) Acceptance
3.) Consideration
4.) Legal Purpose
5.) Compentent Parties

2

To be considered legally competent for the entrance into a contract, a person must be . . .

1.) Mentally sound;
2.) Of legal age; and
3.) Not under the influence of drugs or alcohol.

3

What are the legal characteristics of insurance contracts?

1.) Contracts of Adhesion
2.) Aleatory
3.) Personal
4.) Unilateral
5.) Conditional

4

Contract of Adhesion

A contract of adhesion is drafted by one party. The other party must adhere to its provisions.

5

Aleatory Contract

In an aleatory contract, one party may receive a benefit that is entirely out of proportion to the consideration he or she is giving. Receiving the disproportionately large benefit, however, depends on whether a chance event occurs.

6

Unilateral Contract

In a unilateral contract, only one party makes an enforceable promise. Insurance contracts are unilateral; only the insurer makes an enforceable promise.

7

Conditional Contract

A conditional contract means that its continuation depends upon certain conditions taking place. In an insurance contract, the condition is that the owner continues to pay premiums as agreed.

8

Utmost Good Faith

Legal concept relaying the expectation that all parties in a contract are entitle to receive all material facts before entering into the contract.

9

Reasonable Expectations

Legal concept that relays how promises made by the insurer will be respected when the time comes.

10

Indemnity Contract

An insurance contract that limits the payment for a loss to the actual value of the loss.

11

Valued Contract

A life or health insurance policy that pays a stipulated sum as set in the contract, regardless of the actual value of the loss.

12

Representation

A statement that is true to the best knowledge of the person making that statement. Information provided by an applicant on an insurance application are considered representations.

13

Warranty

A statement guaranteed by the maker to be true in all ways.

14

Concealment

The deliberate withholding of material facts when applying for insurance.

15

Fraud

Deliberate act to deceive with the intent to gain something of value.

16

Waiver

When a party to a contract gives up a right that this party knows he or she holds.

17

Estoppel

When a party to a contract gives up a right without intending to do so.