Insurance Contract Essentials

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following is not a requirement for a valid contract?

  • Consideration
  • Agreement
  • Unilateral terms (correct)
  • Competent parties

Which condition allows contract ambiguities to be resolved in favor of the policyholder?

  • Unilateral
  • Fiduciary
  • Aleatory
  • Adhesion (correct)

What must be present for a party to be legally competent to enter into a contract?

  • Presence of mind and a witness
  • Authorization/licensing and capacity (correct)
  • Being an adult over the age of 18
  • Insurer approval

What does 'utmost good faith' imply in an insurance contract?

<p>Both parties must act with honesty and integrity (B)</p> Signup and view all the answers

Which element of a valid contract is defined as the 'lawful exchange of one value for another'?

<p>Consideration (C)</p> Signup and view all the answers

What characteristic of an insurance contract refers to an 'uncertain outcome'?

<p>Aleatory (D)</p> Signup and view all the answers

If a contract is found to have a legal purpose, what does it imply?

<p>The contract cannot be contradictory to public good (A)</p> Signup and view all the answers

Which of the following elements is not uniquely a characteristic of insurance contracts but is essential for any contract?

<p>Competent Parties (C)</p> Signup and view all the answers

Flashcards are hidden until you start studying

Study Notes

Essential Elements of a Valid Contract

  • A valid contract requires four essential elements: Agreement, Consideration, Competent Parties, and Legal Purpose
  • Agreement involves an offer and acceptance, representing a meeting of the minds between the parties
  • Consideration is the lawful exchange of one value for another, e.g., Application Information + Premium = Insurance Coverage
  • Competent Parties means both parties must be legally competent to enter into a contract, with exceptions for minors, the insane, and those under the influence
  • Legal Purpose means the contract must not be contradictory to the good of the public

Characteristics of an Insurance Contract

  • Unilateral: a one-sided contract where the insurer makes a promise in exchange for an act already performed by the policyholder
  • Adhesion: a contract where the policyholder must adhere to the terms drafted by the insurer, with ambiguities resolved in favor of the insured
  • Aleatory: a contract where one party may receive a value greater than what was paid, based on a possible future happening
  • Conditional: a contract where the insurer's promise to pay is conditioned on certain events or circumstances
  • Personal: life insurance contracts are personal in nature, benefiting individuals
  • Utmost Good Faith: both parties must act with honesty and integrity
  • Fiduciary: a contract involving a position of trust and financial responsibility

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

More Like This

General Law of Contracts: Insurance
45 questions
Business Law Course Overview
37 questions
Business Law Chapter 28: Insurance
24 questions
Use Quizgecko on...
Browser
Browser