In an insurance contract, the principle of equity requires that both parties deal fairly with one another. Insurance is a highly regulated industry and there are certain ways in which an insurance carrier must deal with insureds. Insurance carriers are not allowed to take undue advantage of insured’s lack of information or bargaining power due to the doctrine of unconscionable advantage. They must also follow the doctrine of reasonable expectations in which they should not mislead insureds as to the coverage given under a particular policy.

Another aspect of the principle of equity is that most insurance policies are contracts of adhesion. This means that the policy is a contract to which one party must adhere as written by the other party. Most insureds do not participate in creating the wording of their insurance policies; therefore courts will rule that any ambiguity in the insurance contract will have its meaning applied most favorably for the insured.

A final import note about the principle of equity is that most insurance policies are conditional contracts. This means that it is a contract under which performance is only required under certain conditions. The insurance carrier does not have to pay claims unless the insured performs the contractual conditions. In most policies, this includes prompt reporting of claims, cooperation with investigations of the claim, and providing sufficient information for the insurance carrier to settle the claim.

If you have any questions about the principle of equity and how it affects your landscaping business, please feel free to contact any of our licensed insurance agents.

The Agent Articles section of BearWiseLandscapers.com allows our insurance agents to provide practical information for landscapers. These agents can also obtain quotes and establish a custom insurance program for your landscaping business through our access to a variety of insurance carriers. This agent article is filed under (1) Insurance, and you can follow comments to it through the RSS 2.0 feed. Feel free to leave your own response below: