An oral contract of insurance is enforceable as long as it can be performed within a year.An oral contract is normally used to provide a temporary insurance until it can be put into writing. It is applicable in case of fire, casualty and marine insurance. However, there is every chance of fraud on the part of the insured as well as the agent in matters of claims in case of an oral contract. As a consequence, the time of an oral contract is kept as minimum as possible.
When an oral contract of Insurance is entered into, only the essential features of the contract are discussed. Other terms and conditions of the contract are contained in the form of evidence of a mutual understanding that the standardized policy form was intended to fill in the missing terms.
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