2.2 Special Features of the Insurance Contract
The insurance contract is based on the presentation of truth (representations). Representations are statements made by applicants on their application for insurance that they represent as being substantially true to the best of their knowledge and belief, but that are not warranted as exact in every detail. It is assumed that there is no attempt to deceive or withhold relevant information.
The contract is between the policyowner, who is not necessarily the insured, and the insurer, and the policyowner has the "Right of Assignment." Policyowners, as opposed to policyholders, can give their policy away since they own the policy outright. The ownership of the contract can be transferred (contract transfer) to another with written notice to the insurer. This is known as the Right of Assignment.
(Right of Assignment is elaborated on in Lesson 3 of the course and Unit 6 of the Florida study manual.)
The insurer's obligation to pay is dependent upon a certain condition or circumstance resulting in loss to the insured risk, a distinguishing element of an insurance contract.
