Insurance Fundamentals

An insurance contract is a "contract of indemnification" because its goal is to restore the insured to the (. ) previously held before the loss.

Financial position

An insurance contract is "personal" because it is bound to the "insurable interest " of the (. ) in the policy.

First named insured

(. ) is n intentional act designed to deceive and induce another party to part with something of value.

Fraud

'The Doctrine of Utmost Good Faith". Means that both parties to the insurance contract must SUBSTANTIALLY RELY on the (. ) and (. ) of the other party.

Honesty, integrity

Insurance contracts must not be written to cover ( ) activity or an ( ) purpose.

Illegal, immoral

A waiver can also be suggest4d by intentional conduct that is inconsistent with claiming a known right. This is known as an (. ).

Implied waiver.

An insurance contract is a contract of adhesion because it is written by one party and accepted by the other party. Because the insurance company writes the policy, when the language in the policy is ambiguous, the courts will usually rule (. )

In favor of the insured.

Insuring Agreement

Insurance company's promise to pay to, or on behalf of the insured.

The Conditions section includes the duties of the (. ) and the (. ).

Insured, insurer

For a contract to be considered valid in a court of law, there must be ( ) on the part of both parties to enter into a ( ).

Intent , Legal relationship

''Concealment " is the failure of the insured to reveal (. ) when applying for insurance.

Know material facts

The Conditions section also includes the parameters for (. ), the "other insurance" clause, (. ) rights, cancellation and (. ).

Loss reporting, subrogation, non-renewal

The conditions section also includes the parameters for (. ) the "other insurance" clause, (. ) rights, cancellation and (. ).

Loss reporting, subrogation, non-renewal.

A breach of warranty may, or may not void the policy, depending on whether or not the breach is (. ).

Material to the risk and specific provisions of the policy.

Statements made by the applicant for insurance, OR the agent/producer selling the insurance policy, that are deliberately false, are known as (. )

Misrepresentations

The exclusion section of the policy defines what the insurance contract will (. ).

Not cover

With an insurance contract, the applicant for insurance makes the (. ) and the insurance company (. ) and returns the policy.

Offer, accepts

An insurance contract is "unilateral" because it is a (. ) contract. The insurance company is the only party that is (. ) to perform its part of the agreement.

One-sided, legally bound

Statements made on an application for insurance that are true to the applicant's best knowledge and belief, are known as (. ).

Representations

(. ) occurs when an agent/producer fails to fully disclose all the details of the products,services, and premiums included in the insurance contract.

Sliding

'The Doctrine of Reasonable Expectations" means that the insurance policy should cover the insured and his/her beneficiaries to the extent that (. ) would expect.

The average person

Who are the parties to an insurance contract? The first party is: (. ), the second party is: (. ), the third party is: (. ).

The insured, the insurer, the party damaged by the first party.

(. ) occurs when an agent/producer uses misrepresentations to convince an insured to replace an existing policy purchased from one insurance company, with anew policy from the agent/producer's insurance company.

Twisting

Material misrepresentations may (. )

Void the policy

A (. ) is the intentional relinquishment of a known right.

Waiver

Statements made by an applicant for insurance that are guaranteed to be true, and if found to be untrue later, would void the policy are known as (. )

Warrenties

contract

an agreement between two or more parties that can be enforced by law

(. ) is a legal doctrine that prevents a party from contradicting its own previous actions, if those actions have been reasonably relied upon by another party.

estoppel

Cases where capacity has been deemed insufficient include people under ( ) (except in the case of ( ) insurance). Mentally ( ) individuals, and those who sign a contract while under the influence of ( ) or ( ).

18, life. Incompetent, drugs, alcohol

An insurance contract is (. ), which means it is contingent upon an uncertain event, and provides for an (. ) between the parties if the contract.

Aleatory, unequal transfer

Any contract that was entered into for an illegal purpose, will not be considered ( ) in a court of law.

Binding

A (. ) is a failure of the insured to comply with one or more of the policy conditions.

Breach of warranty

The four elements of a valid contract can be remembered by the mnemonic device CLOC

C=competent parties, L= legal purpose, O=offer and accept, C=consideration

In order for the contract to be binding, all parties must have the necessary ( ) to enter into a contract.

Capacity

(. ) occurs when the agent/producer uses misrepresentations to convince an insured to replace a policy that exists with the agents/producers insurance company, with another more expensive policy from the same company.

Churning

The insurance contract is known as a "conditional contract" because the insurance company will pay claims based on the (. ) of the contract being met.

Conditions

When an insured submits a premium to an insurance company, it is considered to be a (. ).

Consideration

Something that had value in the eyes of the law is known as a (. ).

Consideration (premium)

The mnemonic device D-I-C-E can help you remember the four main parts of an insurance contract:

D-declarations - conditions about policy holder and items insured I-insuring agreement - specifies cause of loss, perils and promise to pay C-conditions - rights and duties of the insurance co and insured in event of loss E-exclusions - what the insurance policy will not cover

All insurance contracts are broken into four parts, GENERALLY SPEAKING. The first part is the (. ) page, also known as the information Page. The page is considered to be the (. ), (. ), (. ) and (. ) of the policy.

Declaration; Who, what, where, when

"Hard fraud" is a premeditated plan to (. ) to obtain a settlement.

Deliberately create a claim

Specifically listing exclusions in the insurance contract eliminates (. ) in coverage, assists in managing moral and (. ) hazards, and allows for (. ) premiums.

Duplication, morale, lower

"Soft Fraud" is unplanned and occurs when a legitimate claim is (. ) to obtain hirer settlement.

Exaggerated

A waiver that is expressly stated is known as an (. )

Express waiver