What is an insurance contract or an insurance
policy? This is the legal document that identifies
or lays out the terms of the relationship between the insured and the insurer. The process begins by the potential or future
insured making a request to the insurer for coverage. As part of this process, the potential insured
will provide extensive information about the contingent risk that it’s seeking to cover. It will disclose any information that could
be relevant to determining the likelihood of a certain contingency of a certain occurrence. This will be the basis by which the insurer
determines whether to offer coverage and if they do offer coverage, they rate for the
premium requirement required for offering that level of services. They will employ something known as actuarial
science in this process to again determine whether to cover and to what extent to cover
against this contingent loss. Once the policy is issued, that is it is accepted
by the insurer, the request for insurance coverage is accepted, you have what is known
as the effective date and that is the date at which any contingency occurring after it,
any occurrence after that date is covered by the terms of the policy. The terms of the contracted policy can be
extremely broad or extremely limited but the entire function again is to lay out the contingent
risk that is covered in any ancillary requirements or any exemptions, anything that is not covered,
anything that is exempted from coverage under the terms of agreement while they laid out
that policy. An important thing there is the policy has
to be based on full disclosure. These general contractual principles apply
to them if an individual fails to make adequate disclosure that goes to the inducement to
enter into the relationship, the contract itself could be held invalid. With that being said, this is the primary
considerations for the insurance contract and on what it’s based. http://TheBusinessProfessor.com