O'Reilly logo

Principles of Risk Management and Insurance, 13th Edition by Michael McNamara, George E. Rejda

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Requirements of an Insurance Contract

An insurance policy is based on the law of contracts. To be legally enforceable, an insurance contract must meet four basic requirements: offer and acceptance, exchange of consideration, competent parties, and legal purpose.

Offer and Acceptance

The first requirement of a binding insurance contract is that there must be an offer and acceptance of its terms. In most cases, the applicant for insurance makes the offer, and the company accepts or rejects the offer. An agent merely solicits or invites the prospective insured to make an offer. The requirement of offer and acceptance can be examined in greater detail by making a careful distinction between property and casualty insurance, and life insurance.

In ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required