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Key Takeaways
Key Takeaways
Key Takeaways
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This chapter covered the structure and components of an insurance contract. Let's recap some of the major points:
Elements of a Legal Contract
Agreement: offer and acceptance
Consideration: premiums and representations on the part of the insured; payment of claims on the part of the insurer
Competent parties: of legal age, sound mental capacity, and not under the influence of drugs or alcohol
Legal purpose: not against public policy
Contract Characteristics
Adhesion - one party prepares the contract; the other party must accept it as is
Aleatory - exchange of unequal amounts
Conditional - certain conditions must be met
Personal - between the policyowner and the insurance company
Unilateral - only one of the parties to the contract is legally bound to do anything
Legal Interpretations
Ambiguities in the contract are always resolved in favor of the insured
The insured can reasonably expect coverage based on the agent's words and actions
Material misrepresentations (if intentional), breach of warranties, concealment, fraud - all can void the contract