What defines a competent party in an insurance contract?

A competent party in an insurance contract is defined primarily by their mental capacity and ability to make informed decisions. This involves being in a state of mind where they can understand the terms of the contract and the obligations being agreed upon. A person not under the influence of substances aligns with this definition, as intoxication or impairment can hinder a person's ability to comprehend or appreciate the contractual agreement they are entering into.

While other factors may contribute to a person being deemed competent—such as age or financial stability—these characteristics alone do not specifically address the necessary understanding and intent required in the context of an insurance contract. For instance, being financially stable does not guarantee that someone has the capacity to understand insurance terms. Similarly, understanding insurance products is important but may not encompass all aspects of competency required for a legally binding agreement, and simply being over the age of 18 does not ensure that a person is competent if they are under the influence. Thus, the emphasis on not being under the influence directly relates to ensuring a clear and competent agreement in an insurance context.