Policy Provisions and Contract Law

What does an endorsement do to an insurance contract?

It modifies the policy's original terms.

What provision defines how a policy will respond if there is more than one insurance policy written on the same risk.

Other insurance

Where is the policy period stated in an insurance policy?

On the declarations page

What is consideration on the part of the insurer?

A promise to pay in the event of a loss

Persons who are not named on the declaration page of a policy but who are protected by the policy are known as what type of insured?

Additional insured

What are the four elements of an insurance contract?

Agreement (offer and acceptance), consideration, competent parties, and legal purpose

What is a warranty in an insurance contract?

An absolutely true statement upon which the validity of the policy depends

In commercial property policies, who has control of the policy, and who can cancel it?

First name insured

In commercial property policies, who has control of the policy, and who can cancel it?

First named insured

What are an insured's duties after loss?

Protect the damaged property from further damage, cooperate with the insurer in settling a loss, and submit proof of loss

Which method of loss valuation is contrary to the principle of indemnity?

Replacement Cost

What does the exclusions section of a policy specify?

What perils are not insured against, or what persons are not covered in a policy.

When does pro rata liability apply?

When an insured has more than one policy covering a loss

In insurance contracts, when is the offer usually made?

When the insurance application is submitted.

In insurance contracts, when does acceptance usually occur?

When the insurer approves a prepaid application

In property and casualty policies, what is required for an assignment to be valid?

a written consent of the insurer

What process is used to settle a casualty claim when the insured and the insurer cannot agree?

Arbitration

What process is used to settle casualty claim when the insured and the insurer cannot agree?

Arbitration

What insurance principle does pro rata liability protect?

Indemnity

What part of an insurance policy contains the insurer's promise to pay a claim?

Insuring Agreement

What is additional coverage in an insurance policy?

A provision that adds more coverage for a specific loss at no additional premium

What is proof of loss?

A sworn statement from an insured notifying the insurer about a loss

What is a binder?

A temporary insurance contract that goes in effect prior to the policy issue

What does the term unilateral contract mean?

A unilateral contract is a one-sided contract. This means only one party makes an enforceable promise.

Who is an insured in property and casualty insurance?

Anyone covered under the policy, even if not specifically named

What is the difference between cancellation and non renewal?

Cancellation is the termination of an insurance policy by either party prior to the policy's expiration date. Non renewal is the termination of a policy at its expiration date by not offering a continuation of the existing policy.

Information about changes to the policy or return of premium can be found in what section of a policy?

Conditions

What part of an insurance policy indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy?

Conditions

What is consideration in an Insurance contract?

Consideration is something of value that each party gives to the other. Consideration on the part of the insurer is binding.

What part of a policy shows the amount of insurance, premium, and policy terms?

Declarations

What section 'personalizes' an insurance policy?

Declarations

When is an appraisal needed and how can it be requested?

If an insured and an insurer disagree about the value of a property loss, either party can make a written demand for an appraisal.