section 1 lesson 5 - the insurance contract

name and define two types of waivers

-express waiver: an oral or written statement or action that voluntarily gives up a known right -implied waiver: inferred from some other type of action or inaction that is inconsistent with the carriers rights under the policy, and thus implies waiver of such right

Misrepresentation

An untrue statement or series of statements that made by the insured, usually at the time an application for insurance is made

Which fundamental element of contract was represented by the $150 monthly premium?

Consideration

what is na contract of adhesion and what is its importance?

In agreement between two parties where the content is created by one party without consideration for the other party and its terms best seen in an insurance policy The importance of this is the consumer being at the mercy of the insurance company and the policy and has a take it or leave it sign

Can you give me a simple explanation of what the differences between liability coverage and physical damage coverage in this new policy?

Physical damage coverage protects you from damage or loss to your own car. Liability coverage provides financial protection from your liability to other people

Concealment

The active failure of an insured to reveal relevant facts that are known only to that insured when applying for insurance

Joes attourney convinces him that there is nothing to worry about and that XYZ will eventually have to resonate the policy and pay for his car repairs. On what was Joe's attorney base his comments?

The company cannot use Joe's age to void the contract as it knowingly excepted Joe's application and issued the policy. Only Joe has that right.

describe the principle of indemnity:

-Insurance is meant to idemnify financially restore and insured/claim and to their pre-loss condition -Insurance policy is not intended to be a vehicle through which an insured/claim in profits from the loss -an insurance policy is intended to make the insured claimant financially whole by paying what is owed no more no less

What are the four elements that a contract must have to be valid?

-and agreement to the terms of the contract by the involved parties, also called a manifestation of assent -adequate consideration for the promises made -we will capacity of the parties to enter into the contract -the contract or policy must have legal purpose

What are the four main parts of an insurance policy and what is the purpose and function of each one?

-declarations identify who and what are covered and where they are located - the insuring agreement covers what coverages are provided by the policy -the exclusions identify what is not covered -the conditions identify what each party must do to ensure coverage

give 4 examples of an insured's duties following a loss

-giving prompt notice of loss to the insurer, promptly referring any legal notices to the insurer -cooperating with the insurer in every practical way -protecting or preserving the insurance rights, doing nothing to prejudice the insurance rights -submitting proof of loss when requested

describe the three different ways a policy may responds when there is more than one policy covering a particular loss

-primary, pays first -exccess, pays only after all other collectible or primary insurance pays -pro rata, pays only that percentage of the loss as the limit of its policy bears to the total of all available insurance

Except in certain circumstances, Texas law prohibits the cancellation of any policy that has been renewed, continued, or has been in force for how many days?

60 days

define a binder and briefly describe its purpose:

A legal agreement issued by an agent or insured to provide temporary evidence of insurance until the policy can be issued. the purpose of this is to get coverage that can be bound by calling the agent and providing the required information a contractor provides insurance coverage for up to 30 days, pending the issuance of the permanent policy

Define estoppel and provide an example

A legal bar to alleging or denying a fact when one's on previous actions or words are to the contrary an example of this would be a tree falls on your house and the insurer sayd you dont have to apply for proof of loss and you believe them, the insurer cannot go back and deny the claim

I see in the others insurance paragraph that my policy seems to make a big thing about my primary and excess policies. What's the difference between a primary and excess policy

A primary policy pays first. An access policy pays only after all other collectible insurance pays.

An insurance policy is defined as:

A written contract or agreement where one party agrees to idemnify or pay another a determinable amount of money or benefit upon undetermined contingencies

Which of the following would result in a breach of contract in the most severe consequences?

An insurance company fails to defend its insured against a lawsuit filed by third-party, resulting in a $3 million award

Since I've already paid my six month premium upfront, can they cancel me if I get in an accident or make a claim?

As long as you paid your premium, the insurance company can only cancel you for a few specific reasons, such as lying and misrepresenting certain critical facts on your application, or if you lose your drivers license.

If the wording or language in an insurance policy is fake or ambiguous, the interpretation of its meaning will generally be in favor of the party who did not control its terms, i.e. the policyholder. This principle is known as...

Contract of adhesion

Investigated a claim and advisor ensure that no further action is required on his part and that the company will handle his defense. Later he finds that the insurance company failed to respond to his defense because they feel that he misrepresented his driving record on his application. If the insured's lawyer were to secure a bad faith verdict against the carrier for their failure to defend him, which principle of insurance would support the verdict against his code carrier?

Estoppel

What are exclusions?

Exclusions describe what is not covered by the policy. For instance, if you use your car as a taxi cab, your policy won't apply. If you intentionally try to run over some one, your policy won't apply

What are the fundamental elements of contract was missing due to the fact that she was only 16 years old?

Legal capacity

John arranged to buy a kilo of marijuana from Marco Polo, as expected drug dealer for $10,000. When John failed to produce the money, Marco Polo tried to sue John in the court for breach of contract, but the case was dismissed because the agreement was missing a critical element. What was the element missing?

Legal purpose

What if I rear end someone but there's only a little bit of damage and they aren't hurt? Since the damage is minimal, should I just try to handle it myself? After all if I report the incident, they might raise my rate and not renew my policy next time.

No. Failure to report the accident can jeopardize coverage if your failure to do so jeopardize the companies opportunity to defend you or itself

What is the section, duties after an accident or loss all about what does it mean?

That section is an every policy, and is known and most policies as the condition section. Every policyholder has a certain duty and responsibility he or she must meet if a covered loss occurs. This section describes what you must do if you get into an accident or your car is damaged.

Where can I find the part of my policy that tells me what is not covered, you know, like rust and deterioration or if I intentionally run someone down?

That's found in the exclusions page

Where do I find a statement of what the company agrees to do for more money and what coverages are provided?

That's found in the insuring agreement

describe the appraisal condition:

The appraisal process is a condition in all property insurance policies in some auto policies as a method of determining the amount to be paid on an insured for a covered loss -Play policyholder and insurance company disagree on the value of a gloss each party employees their own appraiser, the appraiser tries to agree on the value of the damage property, if they can't agree and empires consulted. The final amount agreed-upon by any two of the three parties is the final amount to be paid on the los

I thought I had already had my policy. What's the difference between this binder you gave me in the policy I just received?

The binder was just temporary insurance until the actual an official policy could be issued by the company. This new policy is what controls your coverage

What is the importance of the declarations page of this new document I just received?

The declarations page is a summary of who and what the policy covers, where they are located, and for how much

Assuming insurance company feels to defend its insured, ultimately causing it's insured to be held legally responsible for a large verdict, even in the face of legitimate defenses. What would be the likely consequences?

The insurance company would most likely be held to have acted in bad faith and could be held responsible for the entire ward, plus additional damages for breach of contract and failure to act in good faith.

A waiver is defined as

The intentional or voluntary relinquishment of, or giving up, and known right

waiver

a waiver is the intentional or voluntary relinquishment or giving up of known right example: a policyholder who decides not to report and pursue a minor automobile claim and doing so she gives up her right for recovery.

fraud

an intentional act designed to decieve and induce another party to part with something of value

The long-standing principle that the purpose of insurance is to restore individuals to the financial position they held before a loss and not profit from loss is known as:

the principle of indemnity