Pre License
Participating policies
Pay policy dividends to their policy holders
Two groups that provide insurance protection
Private insurers and government providers
Commercial insurance companies
Stock insurance companies and mutual insurance companies.. Both can market, sell, underwrite, and issue life, health, and property and/or casualty insurance.
Risk Sharing
The earliest forms of insurance were based on risk sharing, by which people who share a common risk band together and promise to "chip in" and compensate a member of the group who suffers a covered loss
Twisting [58-3-115]
The person cannot make up false or misleading statements
Underwirting
The process of if the risk should be accepted or rejected.
Exposure
The state of being subject to a possible loss
Buyers Guide
Type of disclosure to an insurance applicant that explains the applicants rights and responsibilities
Hazard
A condition that increases severity of loss
Insurance Required from Lenders [58-3-135]
A lender may not require that a borrower purchase insurance from the lender as a condition of making, renewing, or refinancing a loan.
Fiduciary
A person holding funds or valuable property for the benefit of another person.
Fraudulent Claims [58-2-161]
A person who knowingly presents a false insurance claim, with the intent to defraud or deceive, or who assists another in doing so, is guilty of a Class H felony.
KEY POINTS 2
An insurer may not discriminate between individuals of the same class in the amount of premium charged, benefits payable, or other terms and conditions of an insurance policy. An insurer may not limit coverage, charge a different premium, or refuse to insure or continue to insure an individual solely because of blindness or partial blindness, deafness or partial deafness, race, color, or national or ethnic origin. Group life and accident and health insurance policies must use an accidental results definition when paying benefits due to accidents. An insurer must send a claimant the forms for filing proof of loss within 15 days after receiving notice of a claim. A person cannot make a false or misleading statement or comparison about an insurance policy in order to induce someone to lapse, surrender, terminate, retain, or convert an insurance policy or buy a policy with another insurer. It is unlawful for a person to act as an agent, broker, limited representative, adjuster, or appraiser without a license. Acting as an agent, broker, or other licensee without a license is a Class 1 misdemeanor. A lender may not require that a borrower purchase insurance from the lender as a condition of making, renewing, or refinancing a loan. A lender that makes mortgage or deed of trust loans must accept a binder issued by an agent, broker, or insurer as evidence of insurance. Premium payments may be made by credit card if the insurer pays the fee imposed by the credit card company and allows all insureds to pay premiums in this manner. The Commissioner is the chief officer of the North Carolina Insurance Department and is elected to a four-year term by voters. The Commissioner can investigate any person or entity engaged in the insurance business at any time. The Commissioner may apply to a court for a restraining order and injunction to prevent a person from violating the insurance laws. Producers must notify the Department of Insurance of a change in residential or e-mail address within 10 days. A person who is charged with engaging in an unfair method of competition or committing an unfair or deceptive act or practice is entitled to a hearing before the Commissioner. When acting in good faith, a person who reports insurance fraud is immune from any liability for providing information to or cooperating with the Commissioner or law enforcement agencies. A person who knowingly presents a false insurance claim, with the intent to defraud or deceive, or who assists another in doing so is guilty of a Class H felony. Anyone who believes that insurance fraud, embezzlement, or a violation of the insurance laws is being or has been committed is required to notify the Commissioner. A person who willfully misstates information in a financial statement or other document is guilty of a Class I felony. Companies, agents, and brokers must keep records of their insurance transactions. The Commissioner may suspend or revoke the license of anyone who does not keep records of their insurance transactions. A person who refuses to produce books and records or who knowingly makes a false statement in them will have his or her license suspended or revoked and will be guilty of a Class 1 misdemeanor. Insurers and producers must maintain an itemized register of every written complaint received for at least five years after disposition of the complaint.
Every insurance policy defines and is defined by...
Its covered perils.
Stock insurance company
Owned by stock holders.
Risk
The Chance of loss
Express Authority
The authority given to the agent by the contract between agent and insurer
Premium
The charge to the policy owner for the risk the insurance contract covers.
Pure Risk
chance of loss and no gain, most are covered by life insurance (Death, serious illness or disability)
Deductible
A stated some of money that the insured must pay before and major medical policy is paid
Risk Retention
Acceptance
Discrimination
An insurance company may not discriminate in favor of any person. It is unlawful to discriminate between individuals of the same class in the amount of premium charged, benefits payable, or other terms and conditions of an insurance policy.
Cost Indexes
During the buying process it is common for applicants to ask producers to compare the cost of two or more life insurance policies. The most effective way to do this is through the use of cost indexes, which use the factors of premiums, cash value, and policy dividends (in the case of participating policies) to compare the relative costs of similar policies. Two common indexes in use are the life insurance surrender cost index, which compares costs at a future date when the policy might be surrendered for cash value, and life insurance net payment cost index, which compares costs at a future date if premiums are continually paid and no cash value is withdrawn.
Three levels of producer authority
Express, implied, apparent
Policy Language [58-3-30]
Group life and accident and health insurance policies must define the term "accident" if policies provide benefits for injuries sustained in accidents. The terms "accident," "accidental injury," and "accidental means" must use "results" language. This means the result of an accident must be unintentional for benefits to be payable.
KEY POINTS
If the insurer accepts the application and issues a policy as applied for, then this means the insurer has accepted the offer. When an insurer issues a policy on a basis other than as applied for, the insurer has rejected the applicant's offer and has made a counteroffer. The applicant's consideration is the initial premium payment. The insurance company's consideration is its good faith promise to pay benefits when and as defined in the policy. Courts have ruled that ambiguities in the contract must be interpreted to the benefit of the policyowner. Health insurance is a personal contract that cannot be transferred or assigned to another party. Life insurance is not a personal contract in the legal sense. An applicant's statements on an insurance application are considered representations.
domestic company
Incorporated of organized in NC
Moral Hazards
Individuals traits and habits that increase the likelihood of loss. Smoking, drinking, drug addiction. A willingness to defraud insurers is considered a moral hazard for which insurers remain alert.
Agents report
Information about the client that is useful for the underwriter
Maintenance of Records [58-2-185]
policy number date policy term amount insured premiums insured's name
Anthony becomes an agent for Acme Insurance Company. Acme has not filed the notice of appointment with the Commissioner. It must do so within how many days?
15 days
Definitions
A consumer report provides information on a person's credit worthiness, credit standing, capacity, character, general reputation, personal characteristics, and lifestyle, and is used in connection with an insurance transaction. An investigative consumer report contains information about a person's character, general reputation, personal characteristics, and lifestyle that is obtained through personal interviews with the person's neighbors, friends, associates, and acquaintances. A pretext interview is an interview whereby a person, in an attempt to obtain information about another person pretends to be someone he or she is not; pretends to represent a person he or she is not in fact representing; misrepresents the true purpose of the interview; and/or refuses to identify him- or herself upon request.
Indirect and direct insurable loss
A direct loss- immediate result of an event involving an insured peril. An indirect loss - more remote but may still be considered an insured loss. For example, the death of a family breadwinner is a direct loss under a life insurance policy. The loss of the decedent's income is an indirect loss resulting from the direct loss of the insured's life.
Key Points 7
A fraternal benefit society is a nonprofit entity that operates on the lodge system, has a representative form of government, has no capital stock, and sells insurance only to its members. A fraternal benefit society may sell life insurance, endowment contracts, annuities, disability insurance, accident and health insurance, and tombstone benefits to its members. Agents of fraternal benefit societies must comply with the same general laws governing licensing that apply to resident and nonresident agents. Fraternal benefit societies must comply with the provisions of the Insurance Code relating to unfair methods of competition and unfair or deceptive acts or practices. An officer, member, or examining physician of a fraternal benefit society who intentionally makes a false or fraudulent statement in a membership application or to obtain money from a fraternal benefit society is guilty of a Class 1 misdemeanor. Soliciting membership for a fraternal benefit society that is not licensed in North Carolina is considered a Class 3 misdemeanor. Making a false statement under oath in a verified report or declaration that is required by law is considered a Class I felony.
Exposure units
Are the basis for each applicants premium.. A coal miners premium would be higher than an accountants. More exposure units will be assigned to a coal miner.
foreign company
Organized under the laws of any state other than NC
Mutual companies
Owner by their policy holders, no stock holders.
alien company
a company incorporated or organized under the laws of any jurisdiction outside of the United States.
Insurable risk
if criteria are met, applicant may be insurable
Binders [58-3-140]
A lender that makes mortgage or deed of trust loans on one- to four-family residences must accept a binder issued by an agent, broker, or insurer as evidence of insurance. However, a lender is not required to accept a binder unless it includes the following: the insured's name and address the mortgagee's name and address a description of the insured collateral the amount of insurance a provision stating that it may not be canceled except by giving 10 days' written notice to the mortgagee
Policy Dividends
Amount returned to the owner of a participating insurance policy's surplus funds
Embezzlement and Misappropriation [58-2-162]
An insurance agent, broker, or administrator who embezzles or fraudulently converts money or other consideration received while transacting insurance is guilty of a felony. A person will be guilty of one of the following: a Class H felony, if the amount involved is less than $100,000 a Class C felony, if the amount involved is more than $100,000
Contract of Insurance
An insurance contract is an agreement between an insurer and an insured individual in which the insurer agrees to pay money or indemnify or reimburse the insured when a loss or injury occurs.
Payment of Premiums by Credit Card [58-3-145]
An insurer, agent, or broker may accept a premium payment by credit card if the insurer allows all insureds to pay premiums in this manner (and does not limit the use of credit card payments to certain persons); and pays the fees imposed by the credit card company for the credit transaction.
KEY TERMS 3
An agent is a person licensed to solicit applications and negotiate insurance for an insurer. An adjuster investigates and settles claims arising under insurance contracts on behalf of the insurer or the insured. A broker represents and sells the products of several different insurance companies. Brokers represent the insured in any controversy between an insurer and the insured. An insurance producer is a person required to be licensed to sell, solicit, or negotiate insurance and includes an agent, broker, and limited representative. A limited lines producer sells, solicits, and negotiates limited lines insurance, which includes motor vehicle physical damage insurance, title insurance, and other types of insurance approved by the Commissioner. A person may not sell insurance in North Carolina unless the person is licensed for that line of insurance. A person may teach prelicensing and continuing education classes only if licensed. The Commissioner appoints an advisory committee, comprised of members from the life and health insurance industry, to recommend rules regarding the content of continuing education courses and the accreditation of course programs. To receive a resident agent's license, a person must be at least 18, complete a prelicensing education program, pay the fee, pass the exam, and not have been convicted of a felony or other crime. Each person holding a life, accident and health or sickness, property, casualty, personal lines, or adjuster license must complete 24 hours of insurance continuing education credit every two years. Individuals must complete a three-hour ethics course during each two-year licensing period. The Commissioner may place on probation, suspend, revoke, or refuse to renew a license if the person committed an act that is grounds for probation, suspension, nonrenewal, or revocation as described in G.S. Sec. 58-33-46. A person can obtain a temporary insurance producer's license that is valid for up to 180 days. A person may receive a nonresident license if he or she is a licensed producer in good standing in his or her home state, submits an application, pays the fee, and gives the Commissioner a certified copy of the license application from the home state. To appoint a producer as its agent, an insurer must file a notice of appointment with the Commissioner within 15 days after receiving the first insurance application from the producer. Resident agents and brokers are not required to countersign insurance applications on behalf of nonresident agents or brokers. Commissions and fees generally cannot be paid to individuals for selling insurance if they are not licensed. A producer doing business under a name other than the producer's legal name is required to notify the Commissioner before using the assumed name. The Commissioner may suspend, revoke, or refuse to renew a person's license if he or she violates the insurance laws. The Commissioner must notify an insurer whenever he or she suspends, revokes, or does not renew a producer's license. Licensees must deliver their license to the Commissioner within 30 days of terminating residency in North Carolina. An insurer must notify the Commissioner within 30 days after terminating a producer's appointment. The Commissioner may issue a restricted military sales agent license to a person who represents an insurer in a foreign country on a U.S. military installation or with U.S. military personnel. A restricted license must be renewed annually. The Commissioner may issue a limited license to a rental car company or franchisee to act as an agent for an authorized insurer. A rental car company or franchisee may only sell excess liability, accident and health, and personal effects insurance in connection with renting a vehicle. The Commissioner may issue a learner's permit to act as an adjuster for up to 90 days to a person who files an application for an adjuster's license, pays the fee, and submits a certificate signed by his or her employer. Acting as an adjuster without a license is a misdemeanor. A producer is personally liable on all insurance policies sold on behalf of an unauthorized insurer. A person who knowingly obtains premium payments through fraudulent representations is guilty of a Class 1 misdemeanor. Intentionally making a false or fraudulent statement in an insurance application in order to obtain a fee, commission, or benefit is considered a Class 1 misdemeanor. A person cannot make a false or misleading statement or comparison about an insurance policy in order to induce someone to lapse, surrender, terminate, retain, or convert an insurance policy or buy a policy with another insurer. Unfair discrimination occurs when persons of the same class and substantially equal risk are charged different premiums, fees, or other charges or when different benefits are paid to these persons. An insurer or producer cannot pay anything of value to induce someone to buy insurance, including a rebate on the premium. An insurer or producer cannot pay anything of value that is not specified in the insurance contract. A person who solicits insurance, collects premiums, or adjusts or investigates losses without a license is guilty of a Class 1 misdemeanor. Agents, brokers, adjusters, and limited representatives must pay a fee to renew or obtain a license.
Loss
An unwelcome and unplanned reduction in economic value
Apparent Authority
Apparent authority is the third type of authority that an agent can assume. It is authority that the contract does not provide; the insurer does not intend; yet reasonably appears to the customer to be granted to the agent based on the agent's statements and the actions (or inactions) of the insurer
Complaint Records [11 NCAC Ch. 19, .0103]
Insurers and producers must maintain an itemized register of every written complaint received. Complaint records must include the following: the Department of Insurance's file number the insured's name the nature of the complaint the insured's policy or claim number a summary of how the complaint was handled
The Commissioner
Is elected for four years.. has the power to adopt rules and regulations to administer the insurance laws; create forms that companies, associations, and insurers must use when filing reports and statements; examine insurers' financial statements; report violations concerning the insurance business to the state Attorney General or other law enforcement officials; administer oaths; and make lists of rates available to the public.
Transacting Insurance without a License [58-3-130]
It is unlawful for a person to solicit insurance, accept premiums, or otherwise act as an agent, broker, limited representative, adjuster, or appraiser without a license. A violation of this requirement is considered a Class 1 misdemeanor
Criteria for insurable risk
Loss must be definable, loss must be measurable, accidental or outside insurers control, part of a large group of similar risks, must not be catastrophic, not be one of the company's states exclusions.
Morale hazards
Morale hazards are also individual tendencies, but they arise from a state of mind, attitude, or indifference to loss. "Because I have insurance for that"
Penalties for Violations: Hearings [58-2-70]
Penalties for Violations: Hearings [58-2-70] A person who is charged with engaging in an unfair method of competition or committing an unfair or deceptive act or practice is entitled to a hearing before the Commissioner. The person must be notified of the time and place of the hearing in advance. The notice will also specify the offenses and violations with which the person is charged. If the Commissioner determines that a violation has occurred, he or she may suspend or revoke a license or certificate of authority; petition a court to impose an order seeking restitution; and/or impose a fine between $100 and $1,000 for each violation.
Physical hazards.
Physical hazards are individual physical characteristics that increase the chance of loss. They exist due to a person's physical condition as opposed to arising from his or her character. High cholesterol is an example of a physical hazard.
Law of Large numbers
Predicting future losses with great accuracy. Mathematical principle of probability that insurance is based on. Actuaries- determine the likelihood of death (mortality) or serious illness (morbidity) for males and females at any given age.
Risk Management
Process we go through to contend with the perils we face daily.
Risk Reduction
Reducing the risk. Can be done by avoiding unhealthy things. Keeping a healthy diet, exercising.
Insurance Regulation
Regulated at the state level. Every state has an insurance department and an insurance commissioner also called insurance director.
Independent insurance brokers
Represent multiple insurers
Key Points 8
The North Carolina Life and Health Insurance Guaranty Association protects policyowners, insureds, and beneficiaries of life insurance policies, health insurance policies, and annuity contracts if an insurer fails to perform its contractual obligations because it becomes impaired or insolvent. All insurers must be members of the association. The association's liability is limited to the amount of the insurer's contractual obligations or amounts specified by law, whichever is less. Insurers and producers may not use the existence of the North Carolina Life and Health Insurance Guaranty Association, or the protections the association offers, for the purpose of selling insurance. Insurers or producers must give applicants a disclosure notice stating that the association may not cover the policy, that coverage may be limited, and that the applicant should not rely on the association's guarantees when selecting an insurer.
Peril
Used interchangeably with hazard.. the event the insurance protects against. Death, disability, accidental injuries and sicknesses.
Career or captive agency system
agent is employed by one insurance company
Risk Management Techniques
avoiding the risk; reducing the risk; retaining the risk; sharing the risk; and transferring the risk.
ERISA
the pension law that explicitly pre-empts state law)
Adverse selection
the tendency of those who need insurance the most to buy insurance.
Risk Transfer
transferring the loss to a third party—is the basis for most forms of insurance today. Through risk transfer an individual or business transfers the risk of loss to an insurance company in exchange for the payment of a premium.
Fraud
willful deception with the intent to gain something of value
Implied Authority
Is not stated in the contract An agent's authority is implied when it is intended to be given by the insurer; usually relates to the general customs of the business; and is not contractually provided or specifically explained.
Key Points 6
No one may publish or circulate a false, deceptive, or misleading statement about the insurance business or about anyone involved in the insurance business. It is unlawful to publish or circulate a false, deceptive, or misleading statement about—or a statement that is maliciously critical of or derogatory to—the financial condition of an insurer, when such a statement is designed to injure anyone in the insurance business. No one may enter into an agreement to boycott, coerce, or intimidate anyone that results in the unreasonable restraint of, or monopoly in, the insurance business. It is unlawful to make false statements about an insurer's financial statements with the intent to deceive the public or a public official. Insurers are prohibited from engaging in unfair claim settlement practices with insureds and claimants. The Commissioner may examine the affairs of any person engaged in the insurance business in North Carolina to determine whether such person has committed an unfair method of competition or unfair or deceptive act or practice. The Commissioner may issue a cease and desist order to prevent a person from engaging in an unfair method of competition or unfair act or practice. Any person who willfully violates a cease and desist order will be fined between $1,000 and $5,000 for each violation. It is unlawful for a person to obtain or attempt to obtain money, goods, property, or services from another person through false pretenses. Licensees must identify themselves and their occupation when transacting insurance and must provide their National Producer Number and the Department's Web site address and phone number to verify their licensing status if requested by a claimant, Department representative, or other person.
Key Points 5
The Insurance Information and Privacy Act governs how insurers and their producers treat personal health information and personal financial information from individuals. The act applies to insurance institutions, agents, and insurance-support organizations that transact insurance and collect information from North Carolina residents. It is unlawful to use pretext interviews to obtain information during an insurance transaction. An insurer or agent must notify individuals about its privacy policies and practices, describe the conditions under which an insurer or agent may disclose this information to others, and provide methods for individuals to prevent an insurer or agent from disclosing this information. An insurer or agent must notify current customers of its privacy policies or practices at least once every year. Insurers and agents who ask questions to obtain information for marketing or research purposes must disclose this purpose. Disclosure authorization forms must be dated, list the types of persons authorized to disclose information, specify the nature of the information that may be disclosed, name the insurer or agent, state the reason why the information is being collected, and specify the length of time the authorization is valid. Insurers and agents may not prepare an investigative consumer report about an individual unless the person knows that he or she may request to be interviewed in connection with the report and is entitled to receive a copy of the report. An insurer and agent may disclose personal and privileged information about an individual only if the person has given his or her written authorization. Insurers and agents may not disclose consumers' credit card or deposit account numbers to a nonaffiliated third party for telemarketing, direct mail marketing, or electronic marketing purposes. If an insurer makes an adverse underwriting decision, it must give the applicant a written notice stating the reason for the decision. Insurers and agents may not make an adverse underwriting decision based on a previous adverse underwriting decision or the fact that an individual previously obtained insurance coverage through a residual market mechanism. The Commissioner may serve a statement of charges and a notice of hearing whenever he or she believes an insurer, insurance-support organization, or agent has violated the Insurance Information and Privacy Protection Act. If the Commissioner determines that the Insurance Information and Privacy Protection Act has been violated, he or she may issue an order requiring the person to cease and desist from the unlawful conduct. A person whose privacy rights are violated may bring a civil lawsuit for equitable relief. When acting in good faith, a person who discloses personal information to insurers, insurance-support institutions, agents, or other third parties is immune from liability. A person who willfully obtains information about an individual from an insurance institution, agent, or insurance-support organization under false pretenses is guilty of a Class 1 misdemeanor.
Key Points 4
The Insurance Information and Privacy Act governs how insurers and their producers treat personal health information and personal financial information from individuals. The act applies to insurance institutions, agents, and insurance-support organizations that transact insurance and collect information from North Carolina residents. It is unlawful to use pretext interviews to obtain information during an insurance transaction. An insurer or agent must notify individuals about its privacy policies and practices, describe the conditions under which an insurer or agent may disclose this information to others, and provide methods for individuals to prevent an insurer or agent from disclosing this information. An insurer or agent must notify current customers of its privacy policies or practices at least once every year. Insurers and agents who ask questions to obtain information for marketing or research purposes must disclose this purpose. Disclosure authorization forms must be dated, list the types of persons authorized to disclose information, specify the nature of the information that may be disclosed, name the insurer or agent, state the reason why the information is being collected, and specify the length of time the authorization is valid. Insurers and agents may not prepare an investigative consumer report about an individual unless the person knows that he or she may request to be interviewed in connection with the report and is entitled to receive a copy of the report. An insurer and agent may disclose personal and privileged information about an individual only if the person has given his or her written authorization. Insurers and agents may not disclose consumers' credit card or deposit account numbers to a nonaffiliated third party for telemarketing, direct mail marketing, or electronic marketing purposes. If an insurer makes an adverse underwriting decision, it must give the applicant a written notice stating the reason for the decision. Insurers and agents may not make an adverse underwriting decision based on a previous adverse underwriting decision or the fact that an individual previously obtained insurance coverage through a residual market mechanism. The Commissioner may serve a statement of charges and a notice of hearing whenever he or she believes an insurer, insurance-support organization, or agent has violated the Insurance Information and Privacy Protection Act. If the Commissioner determines that the Insurance Information and Privacy Protection Act has been violated, he or she may issue an order requiring the person to cease and desist from the unlawful conduct. A person whose privacy rights are violated may bring a civil lawsuit for equitable relief. When acting in good faith, a person who discloses personal information to insurers, insurance-support institutions, agents, or other third parties is immune from liability. A person who willfully obtains information about an individual from an insurance institution, agent, or insurance-support organization under false pretenses is guilty of a Class 1 misdemeanor.
Information and Privacy act
The purpose of the Insurance Information and Privacy Act is to establish standards for collecting, using, and disclosing information gathered in an insurance transaction; maintain a balance between an insurer's need for information and the public's need for fairness in insurance information practices; help individuals determine what information is being collected about them and to verify or dispute its accuracy; limit the disclosure of information collected during an insurance transaction; and help individuals obtain the reasons for adverse underwriting decisions.
Unfair Claim Settlement Practices
Unfair and improper claim practices among insurers, and in particular accident and health insurers, include misrepresenting to insureds or third-party claimants the facts or policy provisions relevant to coverage; failing to promptly acknowledge communications about claims; failing to use standards to promptly investigate and settle claims; refusing to pay claims without conducting an investigation based upon available information; failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; failing to make a good faith effort to promptly and fairly settle claims for which the insured is clearly liable; forcing policyholders or claimants to file lawsuits to have a claim paid by offering substantially less than the amounts eventually recovered through the lawsuits or through settlements of the lawsuits; attempting to settle claims for less than the amount a person would reasonably believe he or she was entitled to; attempting to settle claims based on an application that was altered without the insured's consent or knowledge; making claims payments without stating the coverage under which payments are being made; making insureds aware of the insurer's policy of appealing from arbitration awards in favor of insureds to compel them to accept settlements less than the amount awarded in arbitration; delaying claim investigations or payments by requiring a claimant or physician to submit a preliminary claim report and a formal proof of loss form, which contain substantially the same information; failing to promptly settle claims when liability has become clear under one part of the policy in order to influence settlements under other parts of the policy; and failing to provide a reasonable explanation regarding the basis for denying a claim or offering a compromise settlement.
Speculative Risk
Uninsurable, can result in loss or gain, examples are gambling and investing in stock market.. Not covered by insurance
Proof of Loss Forms [58-3-40]
Upon receiving the claimant's notice of claim, the insurer has 15 days in which to send the claimant the forms for filing proof of loss. If the insurer fails to do so, the claimant can instead provide proof of loss by giving a written statement describing the loss. The claimant has up to 90 days after the loss to file this written proof.
Other Legal Concepts
Utmost Good Faith Reasonable Expectations promises made by the insurer will be respected when the time comes. Indemnity vs. Valued Contracts is one under which the benefit payable cannot be greater than the actual loss the contract owner incurs or the face amount of the policy, whichever is less. Valued contracts guarantee payment of a stated sum regardless of the perceived "worth" of the insured. Representations and Warranties: Statements on an application are considered representations and not warranties Concealment deliberate withholding of material facts when applying for insurance. If the concealed facts would have changed the insurer's decision to offer the insurance policy, then the insurer has grounds to void the insurance contract.
Waiver and Estoppel
Waiver: when one party to a contract gives up a right that the party knows he or she holds Estoppel: is the legal inability to abandon a decision or action once made or taken.
Legal Characteristics of Insurance Contracts
contracts of adhesion: the insurer determines terms and price. It is a take-it-or-leave-it proposition, and little, if any, bargaining occurs. aleatory : one party may receive a benefit that is entirely out of proportion to the consideration he or she is giving. Receiving the disproportionately large benefit personal: most insurance contracts are personal.. As property, it can be transferred by the owner to anyone without permission from the insurer. unilateral: In many contracts both parties make legally binding promises, and each party can sue to make the other party keep a promise conditional: which means their continuation depends on certain actions of the policyowner
The purpose of the Insurance Information and Privacy Act is to
establish standards for collecting, using, and disclosing information gathered in an insurance transaction; maintain a balance between an insurer's need for information and the public's need for fairness in insurance information practices; help individuals determine what information is being collected about them and to verify or dispute its accuracy; limit the disclosure of information collected during an insurance transaction; and help individuals obtain the reasons for adverse underwriting decisions.
Risk Avoidance
is a reasonable strategy to deal with especially dangerous (and avoidable) risks.
Other Private Insurance Providers
medical care service providers fraternal benefit societies industrial (home service) insurers reciprocals Lloyd's associations self-insurers risk retention groups risk purchasing groups surplus lines insurers reinsurance companies
Producers Responsibility
not engage in any form of rebating (i.e., refunding or offering to refund a portion of the premium or anything of value, in return for the applicant's purchase of a policy); make sure all product recommendations are suitable for the customer; avoid replacing any policy unless the replacement will clearly improve the customer's situation; disclose all pertinent information concerning a proposed policy; and avoid misrepresenting the terms or conditions of a proposed policy.
Statewide Insurers wants to obtain an investigative consumer report about an applicant because of questions it has regarding the individual's credit history. What must Statewide do before it can obtain a report?
notify the applicant that he has the right to be interviewed in connection with the report
Elements of a Legal Contract
offer:An offer can be written or verbal. Regardless of how it is made, the offeror makes the offer to the offeree. acceptance consideration: anything of value that a party gives to another party competent parties: For a contract to be valid, all parties must be deemed legally competent. A contract that involves one or more incompetent parties is not enforceable. legally sound, of age, not under influence of drugs and alcohol legal purpose
