Property and Casualty Chapter 2
What is utmost good faith in an insurance contract?
A characteristic of insurance contracts meaning that the insurance company must be able to rely on the honesty and cooperation of the insured, and the insured must rely on the company to fulfill its obligations.
What is an aleatory contract?
A contract under which one party's performance is contingent on an uncertain event.
What is the rule of competent parties?
A requirement that states that for a contract to be valid, it must be made between parties who are considered competent under the law.
What is a unilateral contract?
A type of contract that is "one-sided." An insurance policy is one-sided because only the insurance company is legally bound to perform its part of the agreement.
What is offer and acceptance in an insurance contract?
An element of a legal contract that states a contract must involve two parties. One who makes an offer and another who accepts the offer. Also called agreement.
What is a contract of adhesion?
One party has greater power over the other party in drafting the contract.
What is legal purpose in an insurance contract?
A characteristic of a legal contract that states that contracts are enforceable only if they are not obviously illegal, immoral, or against the public good.
What is consideration in an insurance contract?
A characteristic of a legal contract that states the thing of value exchanged for the performance promised in the contract.
What is in the definitions section of an insurance policy?
It clarifies the meaning of certain terms used in the policy.
What is in the conditions section of an insurance policy?
It describes the rights and duties of the insured, and the insurance company, under the policy.
What is in the insuring agreements section of an insurance policy?
It describes what is covered and the perils the policy insures against.
What is in the exclusions section of an insurance policy?
It lists property, perils, persons, or situations that are not covered under the policy.
What is indemnity?
When a loss occurs, an individual should be restored to the approximate financial condition he or she was in before the loss.
What is in the declarations section of an insurance contract?
Who is insured, what property or risk is covered, when and where the coverage is effective, and how much coverage applies.