Which one of the following is true concerning consideration in property insurance?
A) Dollars must change hands from the insured to the insurer before a contract exists.
B) The only valid consideration is cash payment of all premiums in full.
C) Abiding by the contractual language and paying the premium is the consideration the insured provides.
D) If the premium is not paid at the time of a loss, the insured is given a 30-day grace period to pay.

Question

Quizplus · Accepted Answer

Consideration in property insurance is the exchange of something of value between the parties to the contract. In property insurance, the insured provides consideration by abiding by the contractual language and paying the premium. This is different from option A, where dollars changing hands are not required before a contract exists. Option B is not true because other forms of consideration, such as the promise to pay premiums, are valid. Option D is incorrect because property insurance policies typically require premiums to be paid in advance, and there is no grace period for payment after a loss occurs.

Which One of the Following Is True Concerning Consideration in Property