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● Elements of a ContractInsurance Contract, called a policy, is an agreement between the Insured and the Insurer.The validity of the contract depends upon four essential elements: -

● Agreement (Offer and Acceptance)● Competent Parties● Legal Purpose● Consideration

INSURANCE CONTRACTS

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● Insurance ContractsSpecial Characteristics of Insurance Contracts

● A personal contract● A conditional contract● A contract involving the exchange of unequal amounts● A contract of utmost good faith

● Concealment – Material Fact – Underwriters Decision● Misrepresentation – False Info – Underwriters Decision

● A contract of adhesion ● A contract of indemnity (Insured Should no be extra benefited)

● Valued Policy – (Ex:-Life Insurance Policies)

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● Content of Insurance Policies● Declarations

● Name and location of the Insurer ● Name and address of the insured● Policy Number● Policy Period● Description of covered property or locations● Schedule of coverages and limits● Deductibles● Premium(s)● Policy forms● List of endorsements, if any● Agent’s name● Other important details

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● Content of Insurance Policies● Definitions● Insuring Agreements

● We will pay for the direct and accidental loss to “your covered auto” or any “non-owned auto.” including their equipment minus any applicable deductible shown in the Declarations.

● ExclusionsReasons for Exclusions● To avoid covering uninsurable losses. (War and Nuclear Losses)● To avoid insuring losses that could be prevented. (Intentional Damage)● To eliminate duplicate coverage. (Motor Vehicle Exposures excluded from Home Owners

Policy)● To eliminate coverage that most insured do not need. (Coverage for destruction of

Aircraft)● To eliminate coverage for exposures that requires special handling by the insurer.

(Steam Boiler Explosion – Requires special skill for investigation)● To keep premium reasonable. (Exclude mechanical break down of auto from auto

insurance policy)● Conditions● Miscellaneous provisions

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● Manuscript Policies and Standard Forms● A Manuscript Policy is an insurance policy that is

specifically drafted according to the terms negotiated between a specific insured and the insurer.

● Standard Forms are insurance forms that contain standardized policy wordings. Insurance advisory organizations develop standard forms that many insurers use in their insurance policies. Some insurers develop their own standard forms that they use in policies for their insureds

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● Structure of Insurance Policies● Self Contained Policies

● Self-contained policy is a single document that contains all the agreements between the insurer and the insured that forms a complete policy by itself.

● Endorsement ● An Endorsement is a document that amends an insurance policy in some way.

Endorsements might add or delete coverage, include state specific changes, show a change in the insured’s exposures or otherwise modify the policy.

● Modular Policies● A Modular Policy consists of several different documents, none of which by itself form a

complete contract. Commercial Package Policies are examples of Modular Policy. ● Common policy declarations● Common policy conditions● Common property declarations● One or more commercial property coverage forms● Commercial property conditions● One or more cause of loss forms● Commercial general liability declarations● Commercial general liability coverage form

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● Conditions Commonly Found in Property and Liability Insurance Policies

● Cancellation (Insured and Insurer)● Pro rata Refund● Short rate Refund

● Changes● Liberalization Clause

● Duties of the Insured after a loss● Assignment● Subrogation

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INSURANCE CONTRACTS