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    Characteristics of Insurance Contract

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    aishwarya
    Insurance contracts have 5 key characteristics: 1) They are personal contracts between the insurer and insured where the insured, not the insured property/liability, is protected. Property insurance ownership cannot be transferred without consent while life insurance benefits can be reassigned. 2) They are aleatory contracts where payment depends on chance and the insurer's obligation is typically greater than the premium paid. 3) They are contracts of adhesion where the terms are set by the insurer and the insured only accepts or rejects them in full. Ambiguous terms are construed in favor of the insured. 4) They are conditional contracts where the insurer's payment obligation depends on the insured meeting all policy conditions. 5)

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    Characteristics of Insurance Contract

    Uploaded by

    aishwarya
    593 views5 pages
    Insurance contracts have 5 key characteristics: 1) They are personal contracts between the insurer and insured where the insured, not the insured property/liability, is protected. Property insurance ownership cannot be transferred without consent while life insurance benefits can be reassigned. 2) They are aleatory contracts where payment depends on chance and the insurer's obligation is typically greater than the premium paid. 3) They are contracts of adhesion where the terms are set by the insurer and the insured only accepts or rejects them in full. Ambiguous terms are construed in favor of the insured. 4) They are conditional contracts where the insurer's payment obligation depends on the insured meeting all policy conditions. 5)

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    Insurance contracts have 5 key characteristics: 1) They are personal contracts between the insurer and insured where the insured, not the insured property/liability, is protected. Property insurance ownership cannot be transferred without consent while life insurance benefits can be reassigned. 2) They are aleatory contracts where payment depends on chance and the insurer's obligation is typically greater than the premium paid. 3) They are contracts of adhesion where the terms are set by the insurer and the insured only accepts or rejects them in full. Ambiguous terms are construed in favor of the insured. 4) They are conditional contracts where the insurer's payment obligation depends on the insured meeting all policy conditions. 5)

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    593 views5 pages

    Characteristics of Insurance Contract

    Uploaded by

    aishwarya
    Insurance contracts have 5 key characteristics: 1) They are personal contracts between the insurer and insured where the insured, not the insured property/liability, is protected. Property insurance ownership cannot be transferred without consent while life insurance benefits can be reassigned. 2) They are aleatory contracts where payment depends on chance and the insurer's obligation is typically greater than the premium paid. 3) They are contracts of adhesion where the terms are set by the insurer and the insured only accepts or rejects them in full. Ambiguous terms are construed in favor of the insured. 4) They are conditional contracts where the insurer's payment obligation depends on the insured meeting all policy conditions. 5)

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 5

    Characteristics of

    Insurance Contracts
    1. Personal Contracts

    Insurance protects insured, not the


    property or liability subject to loss.
    Assignment provision

    In property insurance, if ownership of a


    property changes, insurance contracts (policies)
    cannot be transferred to another party (buyer)
    without the insurers written consent.
    In life insurance, the beneficiary or ownership
    of policy may be freely reassigned.

    Characteristics of
    Insurance Contracts
    2. Aleatory Contracts

    A contract whose value to either or both of


    the parties depends on chance or future
    events, or where the monetary values of
    the parties' performance are unequal.

    The insurer's obligation to pay a loss depends on


    uncertain events
    Premium paid by Insured < Claim paid by Insurer

    cf: commutative contract

    The values exchanged are theoretically equal.

    Characteristics of
    Insurance Contracts
    3. Contracts of adhesion

    Insurance contracts are drafted by an insurer and


    an insured must accept or reject all the terms and
    conditions.
    Insured gets the benefit of the doubt.
    Courts tend to construe an ambiguous term in an
    insurance policy in favor of an insured.

    Contracts may be altered by the addition of riders


    or endorsements
    Rider or endorsement a document that amends or
    changes the original policy.

    cf: Contracts of cohesion

    Contracts are drafted by both parties.

    Characteristics of
    Insurance Contracts
    4. Conditional contracts

    An insurers obligation to pay a claim


    depends on whether the insured or the
    beneficiary has complied with all policy
    conditions.
    The insurer may not pay a claim if one or
    more of policy conditions are not complied.

    Duties after loss Homeowners (p. 562)


    Duties after an accident or loss Automobile (p.
    585)
    Duties after in the event of loss or damage CP

    Characteristics of
    Insurance Contracts
    5. Unilateral contracts

    Only one party makes a legally enforceable


    promise.
    Insured are not legally forced to pay
    premium or renew the policy.

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