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  1. Capacity to Contract
    All parties must have the necessary capacity to enter into the contract
  2. Legal Purposes/Object
    Insurance contracts can't be written to cover an illegal activity or immoral purposes
  3. Offer and Acceptance
    Applicant completes an application for coverage and the insurance company eithe raccepts it and returns a policy or binder, or makes a counter-offer
  4. Consideration
    Something that has value in the eyes of the law in which a promisee receives something in return for a promise i.e. paying premiums so the insurance company will cover future loss
  5. Aleatory
    Payment will only begin if a loss occurs
  6. Contract of Adhesion
    Insured must accept the insurance company's policy as it is written
  7. Exeutory
    Both sides must perform certain acts to make the contract legally enforceable
  8. Conditional
    Promises action in the event of a future occurrence
  9. Utmost Good Faith
    Both parties bargain in good faith
  10. Personal Aspect
    Insurance contract is bound to the insurable interest of the insured i.e. if insured property is sold, policy doesn't transfer to new owner
  11. Principle of Indemnity
    Contract must restore the insured to the financial position previously held before the loss
  12. Valued Contract
    Pays stated amount in the event of a claim
  13. Reimbursement Contract
    Pays only the amount of the loss
  14. Unilateral
    Only the insurance company is legally bound to perform its part of the agreement
  15. Breach of Warranty
    An incorrect statement made by the insured that may void coverage
  16. Misrepresentation
    Untrue statements made by the insured that may void coverage
  17. Concealment
    Failure of the insured to reveal relevent facts known to the insured when applying for insurance that may void coverage
  18. Fraud
    intentional act designed to deceive and induce another party to part with something of value
  19. Warranty
    Something that becomes part of the contract and is a statement that is considered to be a guarantee
  20. Reasonable Expectations
    Policies include coverage that an average person would reasonably expect it to include
  21. Waiver
    Voluntary or intentional relinquishment of a known right. Expressed waivers are purposefully given up, implied waivers may be the result of some kind of negligence
  22. Estoppel
    Someone intentionally or unintentionally creates the impression that a certain fact exists and another person relies on that information and is damaged as a result. Guilty party may be legally prohibited (estopped) from asserting that fact
Card Set
Insurance Contract Terms
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