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In this section, you will examine some important concepts that are pertinent to the insurance contract law. First, you will learn about special characteristics of an insurance contract, and the required elements that must be included in each. Next, you will focus on legal concepts and definitions that apply to all insurance policies. This section is full of insurance terms; be sure that you can explain them without having to refer to the text.
| Term | Definition |
|---|---|
| Consideration | Something of value that each party gives to the other (binding force in any contract) |
| Fraud | Intentional misrepresentations or deceit with the intent to induce a person to part with something of value |
| Insurance policy | A contract between a policyowner and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events |
| Lapse | Policy termination due to nonpayment of premium |
| Misdemeanor | A minor criminal offense, considered less serious than a felony |
| Unilateral contract | A contract that legally binds only one party to contractual obligations (one-sided) |
Terms to Know