Chapter 50
Insurance
A contract in which the insurance company (the insurer) promises to pay or otherwise compensate another (either the insured or the beneficiary) for particular loss. Provides compensation in the event of (1) the injury or death of the insured or another, (2) damage to the insured's property, or (3) other types of losses, like those resulting from lawsuits.
Life Insurance
A person must have a reasonable expectation of benefit from the continued life of another person's life. insurable interest must exist at the time the policy is obtained.
Agent
A person who works for the insurance company (who contracts are usually obtained through)
Risk
A prediction concerning potential loss based on known and unknown factors
Property Insurance
An insurable interest exists when the insured derives a monetary benefit from the preservation and continued existence of the property
Underwriter
An insurance company is sometimes called this
Policy
An insurance contract.
Professional Malpractice
Attorneys, physicians, architects, engineers, and other professionals often become the targets of negligence suits.
General Liability
Can encompass as many risks as the insurer agrees to cover. Can protect a business from liability for injuries arising from on-site events held after work hours. Can protect bars and liquor stores to make sure they are not liable for buyers who become intoxicated.
Life Insurance on Family Members
Close family relationships give a person an insurable interest in the life of another.
Universal Life
Combines aspects of both term insurance and whole life insurance. Payments are called "contributions." For every contribution, the issuing life insurance company makes two deductions
Premium
Consideration paid to the insurer
Automobile Insurance
Consists of liability insurance and, collision and comprehensive insurance
Type of Insurance: Malpractice
Coverage: A form of liability insurance that protects professionals (physicians, lawyers, and others) against malpractice claims brought against them by their patients or clients.
Type of Insurance: Accident
Coverage: Covers expenses, losses, and suffering incurred by the insured because of accidents causing physical injury and any consequent disability; sometimes includes a specified payment to heirs of the insured if death resulted if death results from an accident
Type of Insurance: Life
Coverage: Covers the death of the policyholder. On the death of the insured, the insurer pays the amount specified in the policy to the insured's beneficiary.
Type of Insurance: Liability
Coverage: Protects against liability imposed on the insured as a result of injuries to the person or property of another
Type of Insurance: Homeowners'
Coverage: Protects homeowners against some or all risks of loss to their residences and the residences' contents or liability arising from the use of the property.
Type of Insurance: Major Medical
Coverage: Protects the insured against major hospital, medical, or surgical expenses
Type of Insurance: Term Life
Coverage: Provides life insurance for a specified period of time (term) with no cash surrender value. It usually is renewable
Type of Insurance: Disability
Coverage: Replaces a portion of the insured's monthly income from employment in the event that illness or injury causes a short- or long-term disability. Some states require employers to provide short-term disability insurance. Benefits typically last a set period of time, such as six months for short-term coverage or five years for long-term coverage
Collision and Comprehensive Insurance
Covers damage to the insured's car in any type of collision. The price per year is relatively high because it is likely that some small repair jobs will be required each year. Most people take out deductibles of $250, $500, or $1,000, which cost substantially less than zero-deductible coverage.
Liability Insurance
Covers for bodily injury and property damage. Usually described by a series of numbers, such as 100/300/50. These numbers mean the policy will pay a maximum $100,000 for bodily injury (to one person), a maximum $300,000 for bodily injury (to more than one person), a maximum $50,000 for property damage.
Workers' Compensation
Covers payments to employees who are injured in accidents arising out of and in the course of employment.
Business Liability Insurance
General Liability, Product Liability, Professional Malpractice, and Workers' Compensation
Liability Coverage
Homeowners' policy is for personal liability in the event that someone is injured in the insured's property because of unsafe condition on the property. Also applies when the insured damages someone else's property or injures someone else.
Property Coverage
Includes the house, garage, and other private buildings on the lot; includes personal possessions and property at home, work, or while driving. The additional living expenses are covered by the policy if the home is damaged by a fire or some other covered peril.
Key-Person Life Insurance
Insurance obtained by an organization on the life of a person who is important to that organization
Risk Management
Involves the transfer of certain risks from the individual to the insurance company by a contractual agreement.
Product Liability
Manufacturers and retailers may be subject to liability for injuries resulting from the products they sell, and product liability insurance can be written to match specific products' risks.
Broker
Normally an independent contractor (does not work for the insurance company). Deals with an applicant for insurance and it the agent for that specific applicant.
Insurer
Parties to an insurance policy (the insurance company)
Term Insurance
Premiums are lower than for whole life or limited-payment life. No cash surrender value
Homeowners' Policies
Protects against a number of risks under a single policy, allowing the policyholder to avoid the cost of buying each protection separately. There are two basic types.
Insured
The person covered by the insurance companies provisions
Insurable Interest
When it is in existence, it is a primary concern in determining liability under an insurance policy
Whole Life
provides protection with an accumulated cash surrender value that can be used as collateral for a loan. Insured pays premiums during his or her entire lifetime, beneficiary receives a fixed payment on the death of the insured