2.0 Insurance Contracts

Learning Objectives

Upon the completion of this chapter, you will be able to:

1. Identify the essential elements of a legal contract and the legal principles used to interpret contracts.
2. Explain the key principles and characteristics that distinguish insurance contracts from other types of agreements.
3. Recognize and describe the major components of a property and casualty insurance policy.
4. Differentiate among the various types of insureds and their roles under an insurance contract.
5. Define important property and casualty insurance terms and concepts.
6. Understand how common policy provisions and conditions apply within property and casualty insurance contracts.

Overview

Because an insurance policy is a legal contract, it must contain specific elements to be legally valid and enforceable. Insurance contracts also possess unique characteristics that distinguish them from other types of contracts and help balance the rights and responsibilities of both the policyholder and the insurer. This chapter examines the legal principles, contract characteristics, and rules of interpretation that govern insurance agreements. It also explains the standard structure, provisions, and components commonly found in property and casualty insurance policies.