Competent Parties

What Does Competent Parties Mean?

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

Insuranceopedia Explains Competent Parties

Competent parties are the only individuals permitted to enter into legally binding contracts because they are presumed to have the mental capacity to think independently and fully comprehend their actions. For instance, an eleven-year-old child is not considered to have the intellectual capacity required to obtain a property insurance policy.

In most regions, a person must be at least 18 years old to be deemed competent to sign insurance contracts. However, in some areas, the minimum age for competence is 21.