Contract Law Overview

Contract Law

• Agreement: Involves an offer from one party and acceptance by another.
• Consideration: Reflects the exchange of premiums and representations by the insured, and the insurer's payment of claims.
• Competent Parties: Parties must be of legal age, possess sound mental capacity, and not be under the influence of drugs or alcohol.
• Legal Purpose: Contracts must align with public policy and not be illegal.

Elements of a Legal Contract

• Adhesion: Typically features a contract prepared by one party which the other must accept without negotiation.
• Aleatory: Involves an exchange where the amounts involved may be unequal, with outcomes based on chance.
• Conditional: Execution and validity depend on the occurrence of specified conditions.
• Unilateral: Only one party has a legal obligation to perform, often resulting in a promise from the insurer upon acceptance of the premium.

Sources of Insurability Information

• Attending Physician Report: Provides comprehensive and precise medical history for assessing applicant health status.
• MIB Report: Aids insurers by sharing adverse medical information, allowing for better risk assessment.
• Credit Reports: Include consumer's credit history, character, or reputation, vital for understanding risk potential. Comprises consumer reports (credit-related data) and investigative consumer reports (information gathered through personal evaluations).
• Medical Exam Report: Conducted by qualified physicians or paramedics, it offers detailed health assessments required during the underwriting process.