We have all had the opportunity to take out insurance to cover the possible risks we may suffer at a given time. The contract signed by the client and insurer is a fundamental pillar you should not overlook. We tell you everything you need to know about him!
Whenever we decide to approve insurance on a particular branch, from the beginning, we must be clear that we are creating a contract between the company and us. In this way, we agree with the company for certain services. The agreement we are referring to has a series of characteristics that we show you below.
What Does the Contract with Your Insurance Imply?
Signing the contract with your insurer shows a series of points and values that you and the company assume bilaterally.
Commitment
Both parties express their commitment to conduct what is communicated in writing in the contract. Both parties affirm your consent at the time of signing the policy. You and the insurer start a marriage you hope is as prosperous as possible.
Insurmountable Obligation
This feature involves both parties since both are going to do something. You, as insured, will cover the risk described in the policy, while the company will pay the insurance price, the so-called premium. The obligations are impassable and reinforce the commitment in the contract.
The Law, Above All
The contract you sign with the insurer is not outside the law. The contract will become a legitimate link between the insurer and you as soon as the contract is born. Contracts use legal mechanisms that force compliance with the agreement or repair breaches of either party. For this reason, we recommend that you read every detail of the contract before signing anything to ensure compliance with all clauses.
Qualities that All Contracts Have
The legal nature of the insurance contract uses a series of qualities that we explain in this section.
Unprecedented randomness
It may seem like a joke, but it is the reality. The principal obligation of the contract you sign is unknown if it will take place or not. It is unknown if the fact that the policy provides will happen. The situations reflected in the contract are strange until they happen: a fire in the home, a robbery, and the insured’s death are factors that highlight the randomness of this agreement.
To this, we must add another important aspect. Insurers do not specify the extent of the intensity of the incident. For example, it differs from burning only the kitchen as the entire property. Well, companies do not specify this.
In addition, unlike other contracts, we do not know when you will fulfill the obligation. In terms of insurance, the client can do nothing to cause the event. It would be best if you were foreign to the contractor’s will, which does not occur in other agreements.
Mandatory formality
To ensure that everything you agree upon with the insurance company is guaranteed, it is essential to follow a straightforward process. According to legal requirements, the agreement’s formalization occurs through signing a written document known as a policy. This document serves to secure all aspects outlined in the contract. It’s crucial to note that only the terms explicitly stated in writing will be considered valid; verbal approvals do not constitute a binding insurance right under any circumstances.
The good faith of the parties
The contract will always reflect and demand good faith from you and the insurance company. The insurer completely ignores the risk characteristics, for the good faith of the same must exist so that the needs of both parties are fully met.
Typical bilateral
As in all contracts, the insurance company and the insured approve insurance. There are cases in which the insurance is conducted with two companies simultaneously. It is known as coinsurance. Something more frequent is that the policyholder and the insured are not the same people. Despite this, we would only have two contracting parties for individuals who could be in each part.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.