Insurance Contract or Policy - Explained
What is an Insurance Contract?
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What is an insurance contract?
An insurance contract, or insurance policy, establishes the legal relationship between the insurer and the insured. A potential insured makes an offer to the insurer to purchase the insurers services. In the application, the insurer will reveal all information relevant to the insurance relationship. The insurance relationship begins when the insurer accepts the insureds offer to purchase coverage, which is the effective date of the insurance policy. The insurance contract lays out the extent to which the parties allocate or transfer the contingent risk of loss to the insurer. It will detail the rights and obligations of the parties, as well as the types of situation giving rise to loss and the limits of the insurers responsibility to pay for losses incurred.
Note: Failure to disclose all material information may later lead to the contract being rescinded by the insurer.
Next Article: What is an Insurable Interest? Back to: INSURANCE LAW
Why do you think the disclosure of factual circumstances is important in the formation of an insurance contract? Why do you think the effective date is an important concept for insurance contracts?
ABC Corp identifies a risk of customer injury on its premises. ABC approaches 123 Insurance, Inc., about purchasing a policy to cover this risk. What is the process for establishing an insurance contract?
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- Combined Ratio
- Claims Adjuster
- Capital at Risk
- Assigned Risk
- Incurred But Not Reported
- Qualified Actuary
- Cession (Re-Insurance)
- Burning Cost Ratio
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- What are the common categorizations of insurance?
- National Association of Insurance Commissioners
- Insurance Regulatory Information System
- American Academy of Actuaries Definition
- American Association of Insurance Services Definition
- American Council of Life Insurance Definition
- American Insurance Association Definition
- American Risk and Insurance Association Definition
- LLoyd's of London
- Associate in Insurance Services (AIS) Definition
- Associate in Loss Control Management Definition
- Associate in Marine Insurance Management Definition
- Associate in Personal Insurance Definition
- Associate in Reinsurance (ARe) Definition
- Associate in Risk Management Definition
- Associate in Commercial Underwriting Definition
- Associate in Insurance Accounting and Finance Definition
- Associate in Surplus Lines Insurance Definition
- Chartered Insurance Professional Definition
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- Chartered Property Casualty Underwriter Definition
- Vehicle insurancePrivate Passenger Auto Insurance Risk Profile
- Underinsured Motorist Coverage
- Uninsured Motorist Coverage
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- Absolute Beneficiary
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- Accelerated Option
- Accelerative Endowment
- Charitable Gift Life Insurance
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- Assumed Interest Rate
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- Hazard Insurance
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- Liability Risk Retention Act
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- Key Person Insurance Definition
- Own-Occupation Policy
- Self-Funded Health Insurance Plan
- Basket Retention Policy
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- Alternative Risk Transfer Market Definition
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