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Definition
| An insurance contract is aleatory, which means it is contingent on an uncertain event. Someone might pay and never make a claim, but have peace of mind. On the other hand, someone might make a claim and receive more than they have paid in premiums. |
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Term
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Definition
| One party has greater power of the other party in drafting the contract. Although the insured may request special provisions or coverages, it is the insurance company that ultimately draws up and issues the policy. |
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Term
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Definition
| Both sides must perform certain acts to make the contract legally enforceable. |
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Term
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Definition
| Promises action in the event of a future occurrence. The insured's obligations are based on conditions specified in the contract. ex.reporting claim in a timely manner |
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Term
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Definition
| Both parties bargain in good faith. |
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Term
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Definition
| The insurance contract is bound to the insurable interest of the insured person. ex.with the sale of a new house, the policy does not automatically pass to the new purchaser. |
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Term
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Definition
| The contract must restore the insured to the financial position previously held before the loss. |
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Definition
| Pays stated amount in the event of a claim. |
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Definition
| pays only the amount of the loss. |
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Term
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Definition
| means "one sided" The insured has agreed to pay a premium in exchange for the insurers promise to act in the future. Insureds are NOT legally obligated to pay premiums and cannot be sued for breaking the contract. |
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