There are 4 requirements for each valid contract, including insurance contracts: Most insurance contracts are liability contracts. Indemnity contracts apply to insurance when the damage suffered can be measured in cash. B) Guarantees: The guarantees of insurance contracts are different from those of ordinary commercial contracts. They are imposed by the insurer to ensure that the risk remains the same throughout the policy and does not increase. For example, in auto insurance, if you lend your car to a friend who doesn`t have a license and that friend is involved in an accident, your insurer may consider this a breach of coverage because they weren`t informed of the change. As a result, your application may be denied. All contracts must have a legal purpose to be enforceable by the courts, and of course most insurance contracts do. Co-insurance refers to the division of insurance by two or more insurance companies in an agreed relationship. For the insurance of a large shopping mall, for example, the risk is very high. Therefore, the insurance company may choose to include two or more insurers to share the risk.

Co-insurance may also exist between you and your insurance company. This provision is very popular in health insurance, where you and the insurance company decide to divide the covered costs in a 20:80 ratio. Therefore, your insurer pays 80% of the damage covered during the claim, while you pay the remaining 20%. Endorsements are generally used when the terms of insurance contracts need to be changed. They could also be published to add specific conditions to the Directive. Life insurance policies and some health insurance contracts usually contain entire contractual clauses that require the entry of declarations, including enforcement, that the insured makes in the contract itself to avoid subsequent disputes. Entire contractual clauses also prevent inclusion by reference to other writings, such as. B, the articles of association of the company, which the applicant for insurance has probably not read.

The elements of an insurance contract are very similar to the elements required for any other legally binding contract, with some additional elements that are special for insurance contracts. You must have both types of items before creating a valid and appropriate insurance policy. Beneficiaries can be changed because a change of beneficiaries does not change the insured risk, so there are no consequences for the insurer if the policyholder changes the beneficiaries, but the insurer must be informed before the change has legal effect. This is to protect the insurance company from paying the wrong person or having to pay twice. All insurance contracts are based on the concept of uberrima fides or the doctrine of the greatest good faith. This doctrine emphasizes the existence of mutual faith between the insured and the insurer. Simply put, when you apply for insurance, it becomes your duty to honestly disclose your relevant facts and information to the insurer. Similarly, the insurer cannot hide information about the insurance coverage sold. First, let`s talk about the elements required by legally binding contracts in general: A) Insurance: It is the written statements from you on your application form that represent the proposed risk for the insurance company. For example, on a life insurance application form, information about your age, family history, occupation, etc. are the representations that should be true in all respects. An insurance breach only exists if you provide false information (e.g.

B in important statements. Your age). However, the contract may or may not be invalid, depending on the type of misrepresentation that occurs Legal purpose – Obviously, the courts will not enforce a contract that is not legal. For example, a contract for the provision of illegal services would not be a legal and valid contract because the course would not apply it. Property insurance contracts are personal contracts between the insured and the insurer. Property insurance covers the insured for financial losses resulting from damage or loss of property, not the property itself. If the insured sells the property, the insurance does not pass with it. The insurance may not be transferred to third parties without the consent of the insurer.

If ownership and liability contracts could be freely assigned, a person with a low risk of covered loss could buy and sell a policy or give it to a person with a higher risk, making the premium insufficient to cover the higher risk of loss. For example, a parent could purchase auto insurance for themselves and then decide to assign the policy to their teenage child, who would typically have to pay a higher rate because teens have a higher accident rate than other groups. For example, suppose you don`t know that your grandfather died of cancer and therefore you didn`t disclose this essential fact in the family history questionnaire when applying for life insurance. This is an innocent secret. However, if you were aware of this essential fact and deliberately hid it from the insurer, you are guilty of fraudulent secrecy. An insurance company has legal capacity if it is authorized to sell insurance in that particular state and acts within the framework of its statutes. The Contracting Parties must have the legal capacity to agree. Most adults have the legal capacity to sign contracts unless they are drunk, mentally ill or mentally retarded. The main requirement is that the parties know what they agree on – a meeting of minds; Otherwise, there could be no agreement.

In order to protect minors, the law does not confer on them the legal capacity to enter into contracts, unless this is provided for by law. For an insurance contract to be legally binding, the document must meet the essential elements required for all legally binding contracts, as well as certain specific elements that are specific and necessary for insurance contracts. .

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