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Insurance Contracts

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  • Feb. 2010
  • 2064 Words
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The insurance mechanism has two fundamental characterstics; shifting or transferring of a risk of loss or damage, from owners and thereby sharing of losses by all the members of the group. Thus a contract of insurance is a contract by which one party undertakes to make good the loss of another, in consideration of a sum of money, on the happening of a specified event. For example, fire accident or death. BASICS OF AN INSURANCE CONTRACT

There are four basic parts to an insurance contract:
{text:list-item} {text:list-item} {text:list-item} {text:list-item} It is important to understand that multi–peril policies may have specific exclusions and conditions for each type of coverage, such as collision coverage, medical payment coverage, liability coverage, etc. You will need to make sure that you read the language for the specific coverage that applies to your loss.

The Declaration Page is usually the first part of an insurance policy. It identifies who is an insured, what risks or property are covered, the policy limits, and the policy period (i.e. time the policy is in force). For example, the Declarations Page of an automobile policy will include the description of the vehicle covered (e.g. make/model, VIN number), the name of the person covered, the premium amount, and the deductible (the amount you will have to pay for a claim before an insurer pays its portion of a covered claim). Similarly, the Declarations Page of a life insurance policy will include the name of the person insured and the face amount of the life insurance policy (e.g. $25,000, $50,000, etc.). The Insuring Agreement summarizes the major promises of the insurance company, as well as states what is covered. In the Insuring Agreement, the insurer agrees to do certain things such as paying losses for covered perils, providing certain services, or agreeing to defend the insured in a liability lawsuit. There are two...

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