SECTION 2: Contract Law
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U.S. Judicial System
- Criminal Court
- Civil Court
Insurance deals with CIVIL COURT for legal liability from a private wrong
Remedy is compensation for damages; civil fine
Four(4) Elements of a Legal Contract
not against public interest
at the time of the application. Minors,legally insane, or intoxicated are NOT competent.
Required BOTH offer
- made when the applicant completes the application
made when insurance policy is issued
4.Consideration (aka Trade of Value)-
something of value BOTH parties must give.
- Insurer's = Promise
- Considerations made by the applicant for the insurance are: 1) truthful statements AND 2) Premium
***INCOMPLETE APPLICATION IS NO
Contract of Adhesion
"Take it or Leave It"
The insured must "adhere" to the contact terms without negotiation
ambiguity in favor of the insured
Equal value is not given by both parties. One party can benefit more than the other based on chance (or occurrence of the uncertain event).
Impacts the insurer's decision to accept or reject the offer
Material Fact: age, health, high blood pressure, cancer, heart attack
NOT a material fact: cold flu
Written statements regarding material facts that the applicant believes to be true.
Misrepresentation: A false statement
Concealment: Intentional failure to disclose a material fact
A knowing mispresentation of truth or concealment of a material fact
Felony punishable by:
- up to $10,000
- up to 10 years in prison
- Combination of both
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