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Unenforceable Contract

What Does Unenforceable Contract Mean?

An unenforceable contract, in the context of insurance, is an insurance contract that cannot be enforced by law because it violates a statute, goes against public policy, or plays a role in a prohibited activity. Because it is not legally binding, the policyholder cannot legally force the insurance company to pay out benefits, but nor is the latter legally entitled to premium payments.

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Insuranceopedia Explains Unenforceable Contract

For example, an insurance policy that offers coverage for damages a policyholder might incur during an illegal activity would not be enforceable as it is violates the law.

For a contract to be enforceable, certain legal protocols must be followed. For instance, a contract requires valid signatures. If the interested party does not sign it, then it is not enforceable. In addition, contracts often expire after a certain amount of time. Thus, a policyholder who tries to sue the insurance company for benefits after the policy has expired is not entitled to any payments. Lastly, handshake deals are also not enforceable contracts.

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InsuranceCoverageInsurance ContractPersonal Lines

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