Contract = duty from the parties' agreement; tort = duty imposed by law.

Four elements: competent parties, legal purpose, offer and acceptance, consideration (Civ. Code §1550).

Changing an important term = counteroffer, not acceptance.

Aleatory = unequal exchange that depends on an uncertain event.

Conditional = insurer pays only if conditions are met; unilateral = only the insurer makes an enforceable promise.

Adhesion = take it or leave it; ambiguity goes against the insurer (Civ. Code §1654).

Indemnity = pay the actual loss, no profit; the policy limit is only a cap.

Personal contract = covers the person, not the property; a buyer needs the insurer's consent.

§332: the disclosure duty applies to each party.

§380: the policy = the written instrument that sets forth the insurance contract.

§381's six: parties, property or life, insured's interest (if not absolute owner), risks, period, premium.

Memory: 4 P's + interest + risks. No commission.

§330: concealment = neglect to communicate what you know and ought to communicate.

§331: intentional OR unintentional concealment lets the injured party rescind.

Concealment = silence; misrepresentation = a false statement.

§333 five: known, ought to know, waived, excluded by warranty (not otherwise material), excepted risk (not otherwise material).

"Except in answer to inquiries": if asked, answer.

§339: your own judgment need not be shared, even when asked.

§334: materiality = probable and reasonable influence on the insurer, not the event.

No link to the actual loss is needed.

§360: representations use the same materiality rule as concealment.

§358: false = facts don't match; intent doesn't matter.

§355: change or withdraw only before the insurance is effected.

§354: may qualify an implied warranty, never an express provision.

§359: false in a material point → rescission.

§440: express or implied; §444: past, present, or future.

§449: breach without fraud exonerates the insurer from the time of breach; earlier losses stay covered.

§§447–448: material breach → may rescind; immaterial breach → no avoidance unless the policy says so.

§338: fraudulent omission of facts showing a warranty is false → insurer may rescind.

§1871.2 warning: knowingly false information = a crime; fines and state prison.

The warning goes on application and claim forms, not on reinsurance contracts.

Waiver = voluntary, intentional giving up of a known right.

Estoppel = you can't contradict what you led the other to rely on (Evid. Code §623).

Waiver looks at who gave up; estoppel looks at who relied.

Rescission = contract undone, premium generally returned; cancellation = ends going forward.

Grounds to rescind: §331 concealment, §338 fraud, §359 false representation, §447 material warranty.

§448: an immaterial breach does not avoid the policy unless the policy says so.

Application → policy → endorsement (a change after issue).

Cancellation = ended early; lapse = unpaid premium; grace period = extra time to pay.

Premium = units of coverage × rate.

Earned = time used; unearned = time left (refunded on a pro rata basis).

Example: $1,200 premium, 4 of 12 months used → earned $400, unearned $800.

§2062: declared emergency → 60-day premium grace period for residential property in the affected area.

Alternative: reinstate a policy canceled for nonpayment with no lapse or late fees when the insured asks and pays promptly.