Insurance Contract (Versicherungsvertrag)
The insurance contract is the legal agreement under which the insurer, in exchange for a premium, undertakes to provide the agreed benefit upon occurrence of the insured event.
Concept
The insurance contract is the legal agreement concluded between the policyholder and the insurer, under which the insurer, in exchange for payment of a premium, undertakes to provide the contractually specified benefit if an agreed insured event occurs. It governs the mutual rights and obligations of both contracting parties, in particular the scope of cover, the amount of the premium, and the conditions triggering the obligation to pay.
Key Contract Elements
Central elements of an insurance contract include the identification of the contracting parties and the insured risk, the sum insured or limit of liability, the premium and its payment terms, the contract term, the applicable policy conditions, and any exclusions and policy conditions to be observed. This information is generally documented for the policyholder in the insurance policy.
Contract Formation and Formal Requirements
An insurance contract generally comes into existence through corresponding declarations of intent by the applicant and the insurer, with the policyholder’s application requiring acceptance by the insurer; many jurisdictions also impose special statutory formal requirements and disclosure obligations, for example regarding pre-contractual information and a statutory right of withdrawal, which serve to protect the policyholder as the typically weaker contracting party.