Competent Parties

Updated: 11 March 2024

What Does Competent Parties Mean?

Competent parties are parties who are themselves legally capable of entering into agreements and contracts. For an insurance contract to be valid, both parties must be competent. People who may not qualify as competent parties include minors and people with severe mental disabilities.

Insuranceopedia Explains Competent Parties

Competent parties are the only ones allowed to enter into legally binding contracts because they are taken to have the mental capabilities required to think for themselves and fully understand what they are doing. An eleven-year-old child, for example, is not assumed to possess the intellectual capacity required to take out a property insurance policy.

In most places, a person must be at least 18 before being deemed competent to sign insurance contracts. However, in some places, the minimum age of competence is 21.

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