Insurance Chapter 9

estoppel

Occurs when misleading actions of an insurance company agent result in the insured bind stopped from performing according to the provisions of the contract

Principle of Indemnity

The insurer agrees to pay no more than the actual amount of the loss

Principle of Utmost Good Faith

a higher degree of honesty is imposed on both parties to an insurance contract than is imposed on parties to other contracts

principle of reasonable expectations

an insured is entitled to coverage under a policy that she reasonably expects to provide and that to be effective exclusions or qualifications must be clear

contract of adhesion

insured must accept the entire contract with all of its terms and conditions

concealment

is intentional failure of the applicant for insurance to reveal a material fact to the insurer

unilateral

only insurer makes a legally enforceable promise

valued policy

pays the face amount of insurance if a total loss occurs

conditional

policyowner must comply with all policy provisions to collect for a covered loss

personal

property insurance policy cannot be validly assigned to another party without the insurer's consent

actual cash value

replacement cost minus depreciation

warranty

statement that becomes part of the insurance contract and its guaranteed by the maker to be true in all respects

representations

statements made by the applicant on the insurance application

Principle of Subrogation

substitution of the insurer in place of the insured for the purpose of claiming indemnity from a third person for a loss covered by insurance.

Four requirements of legally enforceable insurance contract

- offer and acceptance (of terms) -consideration (value parties give to each other) - competent parties (legal capacity) - contract must exist (for legal purposes)

who has interest

- owner of property - potential legal liability - secured creditors - contractual rights

Principle of Interest

the insured must be in a position to lose financially if a covered loss occurs

replacement cost insurance

there is no deduction for physical depreciation in determining the amount paid for a loss

aleatory

values exchanged are not equal

waiver

voluntary relinquishment of a known legal act

Four ways indemnity is enforced

- ACV -Principle of Interest - Subrogation - Other insurance Clauses

agent's authority

- expressed (specifically granted) - implied (perform incidental acts necessary to fulfill the purposes of the agency agreement) - apparent (third party lid to believe the agent is acting within the scope of appropriate authority)