Contract
A contract in insurance is the legally binding agreement between the policyholder and the insurance company that outlines the terms, conditions, and obligations of both parties. It specifies what coverage is provided, what benefits are payable, how premiums are calculated, and what exclusions or limitations apply. The insurance contract serves as the foundation for determining how claims are handled and what rights and responsibilities exist under the policy.
How It Works
In a Canadian provincial insurance act, "contract" means a contract of insurance and includes a policy, certificate, interim receipt, renewal receipt or writing evidencing the contract, whether sealed or not, and a binding oral agreement. Under British Columbia's Insurance Act Part 4 (Accident and Sickness Insurance), "contract" is defined simply as a contract of insurance, and an "application" means an application for insurance or for the reinstatement of insurance. Under a Canadian individual health and dental policy, the contract is with the insurer and includes the policy document plus the documents received in the welcome package, as well as any amendment or counter-offer agreed upon before the application for coverage is approved and the policy is issued. A Canadian health and dental policy is issued based on the statements made in the application, any other correspondence or information provided in connection with the application (including answers to a medical questionnaire if completed), and payment of the required premiums. In a Canadian insurance act, "insurance money" means the amount payable by an insurer under a contract and includes all benefits, surplus, profits, dividends, bonuses, and annuities payable under the contract.
Example:
If you apply for a personal health and dental plan from a Canadian insurer such as Green Shield Canada and the insurer approves your application and issues a policy covering prescription drugs, dental care, and vision, then that policy document together with your signed application and any welcome-package documents forms the insurance contract between you and the insurer. The contract takes effect once the first premium is paid, and because it is designed to supplement provincial health coverage rather than duplicate it, only the benefits and terms written into that contract are enforceable.
What to Watch For:
Individual health and dental coverage provided under a Canadian contract is designed to supplement, not duplicate, provincial or territorial government health insurance coverage. No agent has the authority to change or waive any of the provisions of a Canadian individual health and dental insurance policy contract. Insurers may amend an existing insurance contract by way of an endorsement, but whether policy amendments are so fundamental as to go to the root of the policy is a mixed question of fact and law that must be assessed case by case.
