What are the elements of an insurance contract?

The elements of an insurance contract are the standard conditions that must be satisfied or agreed upon by both parties of the contract (the insured and the insurance company). In terms of insurance, these are the fundamental conditions of the insurance contract that bind both parties, validate the policy, and make it enforceable by law.

What is an insurance agreement?

An insurance agreement is a legal contract between an insurance company and an insured party. This contract allows the risk of a significant financial loss or burden to be transferred from the insured to the insurer. In exchange, the insured promises to pay a small, guaranteed payment called a premium.

What is the purpose of an insurance contract?

The purpose of the insurance contract is—or should be—to restore the insured to the same economic position as before the loss. The indemnity principle has practical significance both for the insurer and for society. If insureds could gain by having an insured loss, some would deliberately cause losses.