Elements of a Contract
These terms make up the acronym C.L.A.P.
What are Consideration, Legal Purpose, Acceptance, Parties are Competent?
This describes the contract between the insurer and the insured.
What is a Personal Contract?
This describes the assumption that both parties are acting honorably when entering the contract.
What is Good Faith?
These are the terms that make up the acronym DICE+LEAD.
What are Declarations, Insuring Agreement, Conditions, Exclusions; Limitations, Endorsements, Additional Coverages, Definitions?
This clause dictates that the insured can't transfer policy ownership to someone else without the insurer's permission.
What is Assignment? (AKA Personal Contract)
What is Good Faith?
This type of contract is non-negotiable; take it or leave it.
What is a Contract of Adhesion?
These are statements on the application that are true and correct at the time of the application, but are subject to change in the future.
What are Representations?
This part of the policy is where commonly used terms and coverages can be explained to the policy holder.
What is Definitions?
Under the Territorial Clause, these territories are covered under a standard insurance policy.
What are the United States, its territories (eg Guam, Puerto Rico, etc) and Canada?
In order for a party to be competent, they must have these four qualities.
What are being 18+ years of age, not under the influence, sane/of sound mind, and not under duress/coerced?
This type of contract specifies that both parties have duties.
What is a Conditional Contract?
This describes a failure to disclose pertinent info; the act of holding back the truth.
What is concealment?
This part of the insurance policy names who are the insured(s), what is covered, when the policy period is, where the insurable property is located, and how much coverage there is.
What is Declarations?
This clause dictates that the insurer assumes the right to sue the at-fault party after they've paid the insured for the claim.
What is Subrogation?
These are what both the named insured and the insurance company offer for Consideration:
What is paying premium and truthful statements for the named insured, and the promise to pay claims for the insurance company?
This contract describes unequal exchange.
What is an Aleatory Contract?
_______ describes voluntary surrender of rights; _______ dictates that one cannot go back on that right.
What are waiver & estoppel?
Predictable events, catastrophic incidents, or perils that are covered on another policy are all examples of this.
What are Exclusions?
This is what the Liberalization Clause states.
What is the statment that any benefit/coverage provided must be given to all insured on the books, and will not increase or decrease the premium?
These components make up the Offer and the Acceptance of an Insurance Contract.
What is:
Offer - made by applicant through application and initial premium
Acceptance - insurer agrees to issue insurance after receiving initial payment
This contract only binds one party.
What is a Unilateral Contract?
This describes a lie or statement to be untrue that will impact the policy and, possibly, could lead to the policy being voided.
What are Material Misrepresentations?
_________ are coverages that can be purchased, adds to, deletes, or changes an existing policy, and will impact the premium; while _________ are automatically included and do not cause any premium increase.
What are Endorsements and Additional Coverages (aka Supplementary Coverages)?
If a mechanic damages your car while test driving it after repairs, this clause states that your policy would not pay.
What is the No Benefit to the Bailee Clause?