The Liberalization Clause 

(permits...)

Abandonment of property to the INSURER is prohibited

(T or F)

?

Valued policies do not pay an agreed amount if a total loss occurs.

(T or F)

?

Appraisal is used on Property policies to determine the amount payable.

(T or F)

?

Done by an underwriter who classifies the applicant based on the underwriting requirements of the insurer.

•Job is to match the risk presented with the premium charged by the insurer

The percentage of expenses paid out in comparison to the premiums collected.

(includes expense of insurer commissions)

RATES

• Define
• How Many Types
• Who is considered the 'rating bureau'?

Are set by the insurer at a level sufficient to pay claims and company expenses. 

• In most states insurers must file all rates and rating plans with the Department of Insurance
• 6 Types
• ISO - develops and files rates and policy forms with the various states on behalf of its members, who are insurance companies. An ISO member may adopt the ISO filings or file for its own.

• MANUAL
• EXPERIENCE 
• MERIT 
• RETROSPECTIVE 
• JUDGEMENT
• LOSS COST

• The cost of claims plus the cost of administrative expenses less than any interest the insurer anticipates making by investing prepaid premiums
• Rates may not be too high, too low, or unfairly discriminatory 

Failure to act as a reasonable person. May be constituted by acts of omission, commission, or both.

Considered a tort.

Anything that can cause a potential loss.

Such as: Fire, lightning, wind, etc.

*An insurance policy may name the perils insured against, or it may be an All Risk form - one that insuers against all perils not speciaifcally excluded in the policy.

CART

acronym for ways of managing risk

• CONTROLLED - when a person practices living a healthier lifestyle thereby reducing their chance of major illness.
• AVOIDED - a person might stay home rather than drive somewhere
• RETAINED - when a person decides to assume financial responsibility for certain events. Ex. The deductible amount on a auto insurance policy may be seen as a way the insured retains some portion of the risk and as a result the premium may be reduced for their assumption of risk.
• TRANSFERRED - (2 ways): If someone's negligence causes an injury, the injured person could sue the negligent party, transferring the burden of the risk to the negligent party. The second way of transferring risk is through the use of insurance. The risk of loss is transferred to the insurance company. Differs from the 1st transfer in that the burden is transferred to more than one party. It is shared among a number of insureds who share the same chance and uncertainty of events

Presented by the insured to his insurer.

Ex. when the insured's house burns down

Presented by the claimant to his insurer when the insured runs over that party with his car for example.

Examples:

• The driver of the car that hit the worker (not an employee of the worker's company)
• The manufacturer of a defective product that injured the worker
• A property owner who failed to properly maintain a safe workplace
• A fall that was not the employer, employee, or co-worker's fault.
  (Example: Another contractor on the job site whose negligence caused the worker's injury.)
• The owner of an animal that bit a worker.

The attorney is paid reasonable fees and costs. The injured worker receives 25 percent of the net recovery. L&I is then reimbursed for benefits paid, less its proportionate share of fees and costs. Any remaining balance is paid to the worker. The amount of this remaining balance, less the department's proportionate share of fees and costs, is subject to offset against any future benefit entitlement under the claim.

What Type of Contract is an Insurance Policy?

Why?

C.O.A.L

Acronym for 4 essential elements of contracts (policies) to be enforceable in court

THERE ARE 16 ELEMENTS AND PRINCIPLES TOTAL

• CONSIDERATION - the exchange of something of value b/w the parties. The client pays the premium and the insurance company promises to provide coverage. The consideration given b/w parties does not necessarily have to be equal. 
• OFFER -this must be clearly communicated. Usually the client makes the offer on completion and signing of the application, and when writing the check for the first premium payment.

THE 16 ELEMENTS & PRINCIPLES of CONTRACTS

(COAL continued...just name the terms)

1. CONSIDERATION
2. OFFER
3. ACCEPTANCE
4. LEGAL PURPOSE/LEGAL CAPACITY
5. DOCTRINE OF ADHESION
6. UNILATERAL
7. ALEATORY
8. REPRESENTATIONS
9. CONCEALMENT
10. FRAUD
11. CONDITIONAL
12. PRINCIPLE OF INDEMNITY
13. WAIVER & ESTOPPEL
14. DOCTRINE OF UTMOST GOOD-FAITH
15. WARRANTS
16. DOCTRINE OF REASONABLE EXPECTATIONS

CONSIDERATION PAID BY EACH

(A) - $ PAID BY @ PARTY IS UNEQUAL

(B) - OUTCOME DEPENDS ON CHANCE (LOSS)

TRUTH TO THE BEST OF THE CLIENT'S OWN KNOWLEDGE (WHAT YOU THE INSURED BELEIVE TO BE THE TRUTH)

• Based on the Doctrine of Good-Faith & applies to all parties
• There are 2 APPLICATIONS:

- App for Coverage

- App for a Claim

A misrepresentation will not void an app.

DELIBERATE OMMISION OF A MATERIAL FACT

CAN VOID A CLAIM & CONTRACT

-means you know the company would take a different course of action given that concealed info.

DELIBERATE ATTEMPT TO DECEIVE

• A false statement intended to deceive the insurer and induce it to part with something of value or to surrender a legal right.
• May void a policy

BOTH PARTIES MUST COMPLY WITH CERTAIN SPECIFIED CONDITIONS - (the portion of an insurance contract that sets forth the rights and duties of the insured and the insurance company)

• Conditions written by INSURER
• Report claim ASAP in writing
• Can't abandon the situation
• One party can't sue another until all conditions have been complied with

WAIVER: VOLUNTARILY GIVING UP A KNOWN RIGHT

ESTOPPEL: (i.e. Doctrine of Estoppel) - ONCE GIVEN UP, CAN NOT BE USED AS NOT COMPLYING WITH CONDITION OF A CONTRACT

USUALLY WRITTEN INTO THE INSURANCE CONTRACT

IF BREACH OF WARRANTY COULD POSSIBLY:

1. Suspend Coverage
2. Suspend Policy
3. Void Coverage
4. Void Policy

A social device that protects people against certain types of financial losses by transferring pure risk from individuals to a group.

• It involves the pooling of a large number of individual risks.

Is the chance of loss or gain.

Insurance DOES NOT deal with speculative risk.

ALLOWS FOR REASONABLE PREDICTION OF THE LOSS EXPERIENCE OF A GROUP OF INSUREDS

• it makes accurate predictions of similar risks possible
• an insurance company bases its rates on a homogeneous group. Risks are not usually considered insurable unless the insurer has a large enough base of previous loss experience to be able to accurately project future losses.

AN INCORPORATED INSURANCE COMPANY WITH CAPITAL DIVIDEND INTO SHARES AND OWNED BY THE SHAREHOLDERS.

PROFITS ARE SHARED BY THE STOCKHOLDERS.

POLICYOWNERS ARE NOT ENTITLED TO SHARE IN COMPANY PROFITS.

OWNED BY THE POLICYOWNERS.

DIVIDENDS ARE PAID TO THE POLICY OWNER.