ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A policy contract binds the insurer and the insured in an agreement in which the insured pays the premium and the insurer pays for the financial losses, if there be any. Only if the insured pays the premium, the policy contract remains valid.

Detailed explanation-2: -An insurance policy is a legal contract between the insurance company (the insurer) and the person(s), business, or entity being insured (the insured). Reading your policy helps you verify that the policy meets your needs and that you understand your and the insurance company’s responsibilities if a loss occurs.

Detailed explanation-3: -SHARE. 1) An insurance policy is a contract between the insurer and the insured.

Detailed explanation-4: -In general, an insurance contract must meet four conditions in order to be legally valid: it must be for a legal purpose; the parties must have a legal capacity to contract; there must be evidence of a meeting of minds between the insurer and the insured; and there must be a payment or consideration.

Detailed explanation-5: -Most insurance policies are unilateral contracts in that only the insurer makes a legally enforceable promise to pay covered claims. By contrast, the insured makes few, if any, enforceable promises to the insurer.