Insurance Chap 2

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  1. 1. Legal in nature
    2. Agreement of the parties on value & conditions
    3. Considerations (something of Value)
    4. Competent Parties (must be 18 in Illinois) not mentally ill
    5. Offer and acceptance
    Elements of an Insurance Contract
  2. 1. Conditional
    2. Aleatory
    3. Personal Contract
    4. Unilateral
    5. Adhesion
    Aspects of an Insurance Contract (the uniqueness)
  3. Conditional aspect in that the insurer's promise to pay benefits is dependent upon the occurrence of the risk insured against. If the occurence of the risk does not materalize, no benefits are paid.
  4. The contract may or may not pay out more in benefits that the premiums paid in by the insured. The benefits of a life contract can be huge compared to the premiums paid.
  5. An agreement that concerns an individual, not the insured's property. This allows an individual to assign benefits of a life contract to a bank to cover a loan. The insured always has an insurable interest in their own life.
    Personal Contract
  6. The contract is that one party (the insurer) makes any kind of enforceable promise. Insurers promise to pay benefits upon an occurence (i.e. death or disability)
  7. The contract is prepared by one party (insurer). It is not a contract of "negotiation". The policy owner accepts the contract by payment of premium and "adheres" to the terms of the contract.
  8. 1. Ambiguities
    2. Reasonable Expectations
    3. Indemnity
    4. Utmost Good Faith
    5. Parol Evidence Rule
    Legal Interpretation of Insurance Contracts
  9. Language in an insurance contract that is unclear or can lead to different conclusions. In lawsuits involving policy language, the courts have ruled against the insurance companies because of "adhesion"
  10. This concept means the policy owner can expect the insurer to perform its duties as stated in the policy.
    Reasonable Expectations
  11. A policy or provision to restore the insured to his original financial position prior to the loss. This concept applies to health or property insurance. (reimbursement)
  12. It is assumed that all parties to a contract enter in good faith and disclose all relevant facts and plan to carry out their contractual obligations. If applicant fails to disclose material facts, that act can make the contract null and void.
    utmost good faith
  13. The rule prohibits the introduction into a court preceding any oral or written agreement that contradicts the final written agreement. If a producer tells the insured that he is waiving a policy provision, that statment would be inadmissible in court of law. That is an example or misrepresentations. (illegal)
    Parol Evidence Rule
  14. 1. Declarations
    2. Agreement
    3. Policy Period
    4. Conditions
    Policy provisions or Sections (Skeleton of the property policy)
  15. Page (at the end of chapter) is the portion of the insurance contract which contract which contains the following:
    a. Name and address of the insured
    b. Location and Description
    c. Policy period (inception date and expiration date)
    d. Amount of premium
    f. forms and endorsements
  16. Statement that the insurer will provide the insurance described in the policy in return for the premium and compliance with all applicable provisions of the policy.
  17. All covered losses must occur during the policy period. All property & casualty policies start and end at 12:01am (one minute after midnight)
    Policy Period
  18. Limit and define provisions within an insurance policy that, along with the insuring agreement and exclusions, complete the contract. Policy conditions describe the duties and obligations of both the insurer and the insured.
  19. specify hazards, listed in an insurance policy, for which payment will not be paid. Some examples of common "*" are:
  20. 1. Ordinance or Law
    2. Earth Movement
    3. Water Damage
    4. Power Failure
    5. Neglect
    6. War
    7. Nuclear
    8. Government Action
    9. Intentional Loss
    10. Faulty, inadequate or defective properties
    common Exclusions
  21. a. Named insured, family members of the name insured or spouse (domestic partner) or any relatives
    b. Residents of the insured's household
    c. children under 21 living in the residence including foster child or foreign exchange students that under the care and custody of the insured
    d. Students enrolled full time, who resided in the household before moving out and are under age 24 & a relative.
    Definition of the Insured
  22. It is the responsibility of the insured to take the necessary precautions to take care of property to avoid further damage.  The responsibilities of an insured after a loss include but are not limited to the following
    Duties of the Insured
  23. A. Give prompt notice of the claim to the insurer or producer
    B. Protect the property from further damage
    C. Keep an accurate record of repair expenses
    D. Prepare an inventory of damaged personal property showing quantity, description, actual cash value and amount of loss.
    E. Within 60 days, after request of the insurer, submit the signed PROOF OF LOSS (statement that the loss has occurred and submits receipts, documents and bills
    Responsibilities of an insured after a loss include but are not limited
  24. Upon acceptance of premium payment, the insurance company agrees to provide indemnifications to the insured, in the event of a loss, set forth in the provisions.
    Obligations of the Insurance Company (Insurer)
  25. Payment of losses for the dwelling and/or contents will be made to the named insured and to any named mortgagee. If a premium is not paid by the insured, the mortgagee is notified by the insurer. The mortgagee requires a certificate of insurance (Proof of coverage).
    Mortgagee Rights
  26. 1. Pay the premiums
    2. File a proof of loss
    3. be listed on the settlement check
    Mortgagee rights
  27. This document details the cause of the loss. It provides a list of property damaged or destroyed and holders of any interest in the property. When requested by the insurer, the insured must submit a signed proof of loss form for the insurance company to consider before the claim paid
  28. The insured will provide notice of claim to the insurance company or its producer (agent) promptly.
    Notice of Claim
  29. If the insurer and insured cannot agree on the amount of a loss, each will choose an appraiser. The two appraisers will then select an "umpire" to assist in coming to an agreement. Each party will pay its own appraiser and equally share the expenses of the appraisal and "umpire". Arbitration uses the same method as above and determines if the insured is legally entitled or recovery or amount due.
  30. If property is covered by other insurance this policy will pay only the portion of a loss caused by any insured peril applying under this policy.
    Other insurance provision (Pro-rata Liablity)
  31. Warranties
    Concealment or Fraud
    Classifications of Statements or Answers to Questions
  32. A promise or guarantee concerning the risk to be insured and is part of the policy. If found to be untrue, that false statement is a cause to void the policy by the insurer.
  33. Statements of material fact that is reasonably accepted as substantially true. In absence of fraud, it cannot void the contract.
  34. The entire policy will be void if, whether before or after a loss, the insured has:
    a. Intentionally concealed or misrepresented any material fact or circumstance.
    b. Engaged in fraudulent conduct
    c. Made false statement relating to the insurance.
    Concealment or Fraud
  35. is a federal law which mandates confidential, accurate and fair reporting information.
    Fair Credit Reporting Act
  36. 1. Applicants must be told if a report is to be made.
    2. It must be made a part of a written disclosure statement
    3. Adverse information must be given and will only be given to the applicant
    Fair Credit reporting Act 3 laws
  37. Initial notice must be provided to insured at the time of the application and annually thereafter. The act limits the disclosure of nonpublic personal financial information about the customers to affiliates and certain nonaffiliated third parties. Nonpublic personal financial information would include social security number, assets, liabilities, health, date of birth, and health information
    Privacy Protection (Gramm-Leach Bililey Act)
  38. Underwriting decisions are based on the information provided by the insured and the producer at the time of the application. Any omissions can and may void the contract. It is extremely important that producer provide the underwriter with an accurate picture of this risk. The application becomes a part of the contract after the policy is issued.
    Policy Application
  39. The Act created a federal "backstop" for insurance claims related to acts of terrorism in 2002. This law is intended to provide financial back up for the insurance industry with insurers required to repay the federal government for loans to pay for losses from acts of terrorism. The Act was set to expire December 31, 2021. Terrorism losses are covered under all policies.
    Terrorism Risk Insurance Act
  40. Fair Credit Reporting Act
    Privacy Protection (Gramm-Leach Bililey Act)
    Terrorism Risk Insurance Act
    3 Laws
  41. 1. Pair and set
    2. Glass Replacement
    3. Suit
    4. Abandonment
    5. No Benefit to Bailee
    6. liberalization clause
    7. Fungus and mold
    Other miscellaneous Provisions
Card Set:
Insurance Chap 2
2016-01-27 01:08:41
Missouri Insurance test

policy provisions and contract laws
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