Insurance (Contract Law)
I. Terminology
II. Coverage Issues
III. Types of Insurance
IV. Insurer's Duties/Bad Faith
Insured/Assured- the person who shifts the risk to the insurance company
Insurer/Assurer- the party that bears the risk
Premium- consideration (payment)
Deductible- the amount of risk the insured retains
Proceeds- when an insured has a loss and is reimbursed by the insurer
Beneficiary- the person to whom the loss proceeds are paid
Occurrence- the risk that the insurer is insuring against (car accident, etc.)
- Must be:
- Sudden -occurring all at once, and
- Accidental -non-intentional (intentional acts are never insurable)
Claim -when you demand that the insurer pay
Insurable Interest -you must have an insurable interest in order to insure
(You can take out a life insurance policy on someone who owes you money, as long as it does not exceed the amount owed.)
Cancellation -either you or the insurance company discontinue your coverage
Lapse -allow policy to run out or fail to make payment (can be reported to credit profile, always cancel.)
FICO score- how much money you owe 30%, mostly defaults, and lapse of insurance, and amount of credit/how much you owe, age of account, etc.
Knowing what's covered- READ YOUR POLICY!
Fire Insurance-
Hostile - one which originates in a place it's not supposed to be
Friendly- one which originates in a place it IS supposed to be (not covered)
Home Owners Insurance
Hurricanes, rainstorms, tornados, police action, riots, vandalism & theft -covered
Floods, earthquakes, soldier action, insurrection, nuclear disaster, termites, mold -not covered
Top Calamities- 1.Non-flood water damage 2. Wind 3. Hail, Combined =81%
Types of Insurance -Infinite
Pet insurance, divorce insurance, etc.
Auto Insurance- Combo Property/Liability
-Liability - the only insurance that WA requires, pays other driver if you are at fault
-UIM/UM - UnInsured/UnderInsured pays you if the other driver is at fault
-Comprehensive -covers your vehicle from non-operational losses (trees, theft, storms, etc.)
-Collision -covers damage to vehicle if you have a collision
-PIP/Med Pay -pay your medical bills and your passengers medical bills, whether or not you're at fault
-Single/Limits/Aggregate -25/50/10 how much insurance will pay to any one player/how much insurance will pay for entire accident/property damage maximum
(Auto insurance does not cover the contents of the vehicle)
How to save money-
If your car isn't worth much you may not need comprehensive/collision.
Always have liability and UIM/UM. The less insurance you carry the lower your premium. Don't drop coverage amount. Increase your deductible to save money. You probably won't turn in a smaller loss anyway, since your rates would go up. Typically if you increase your deductible to $1000 your decrease your premium 40%, without sacrificing coverage.
Personal Property -Home Owner/Renters
Covers the personal property, not the location of the property (doesn't matter where)
5 Things Most Likely to be Stolen out of your car (and NOT covered)
1. Jewelry
2. Furs
3. Cash/Coins
4. Guns
5. Silver
-Indemnity Contract -Insurer gives value of claim, not face value of policy (except Life) you must establish value of loss (through receipts, etc.)
-Replacement/ACV (Actual Cash Value) -sufficient money to buy item of like kind and value/actual cash value
Marine -covers losses in shipping of goods and expectation profit
Title -insures title of property
Inland Marine/CGL (Comprehensive General Liability) -covers building and equipment for businesses
Subrogation Clause -once insurance company pays your loss they step into your shoes and assume all rights that you had (gives them the right to sue party at fault)
Increase of Hazard Clause - allows for adjustment based on reevaluation of risk
PUP (personal umbrella policy) -(Bruce says they're wonderful) adds coverage on top of your other policies
Professional Liability/E&O- Errors and omissions -malpractice insurance
Life
Difference is how you make payments:
-Whole/Ordinary/Straight -premium is set and never changes (can be expensive) Build up a cash surrender value (can borrow against the policy)
-Term -Year/5yr/10yr increment periods, cheap while you're young, but gets expensive as you age.
Do you need life insurance? Does anybody care financially if you die?
If so, usually 7-10X your income to replace you.
Disability -pays you if you are injured or disabled. Tip to save $- you only need 65% of income because it is not taxable.
Grace Period -periods of time after the expiration date of the policy wherein the insured may reinstate the policy without penalty- but during the grace period you are UNinsured
Duty to Defend/Indemnify -insurance company will defend claim/make loss right
Reservation of Rights - issued in non-covered occurrences (insurers owe their clients a FIDUCIARY duty) reserve right to not proceed in insured's defense
"Insurers are in inherent conflict with their insured."
Insurers only make money by increasing premiums or denying claims
Bad Faith -denying claims out of hand
Law in WA says that if the insurance company has the opportunity to settle within the policy limits and doesn't, and goes to trial instead, they face the entire settlement.
Your FICO scores go down if you are named in a lawsuit. (Farmers, Allstate, State Farm- majority of lawsuits.) (Bruce has Metlife, would recommend Progressive, Pemco.)
--Complex Litigation--
One or more related cases which present unusual problems and require extraordinary measures or special treatment.
-Multiple related cases, multiple parties, multiple jurisdiction or all three.
-FRCP 16, 26, 37, 42, and 83. Additional grants of authority to court to handle complex lit.
-Chambers v. NASCO, 111 S.G. 2123, 2132-37 (1991)
Three Primary Areas of Difference
1. More cooperation between parties (joint submissions, etc.)
2. Less reliance on formal discovery
3. More active judicial participation
