insurance law Flashcards
(23 cards)
Insurance
management and reduction of risk; allows an individual to engage in risky behavior without fear of loss
risk pooling
the combination of individuals’ financial resources in order to calculate a premium. This reduces the “cost” of risk
Risk Transfer
relies on one party assuming risk. Risk is transferred to a third party
Insurable interest
party benefits more from the insured item’s continued existence than without it. An asset that needs to be preserved is valuable and thus should be insured
Moral hazard
Even though someone has something “valuable” they change their calculus and decide that they are better of losing it and collecting the money awarded. Arson is a common example of this
Exclusions
you get coverage for loss except if you violate policy. this encompasses intentional acts that cause loss.
Disclosure
individual must disclose information about what they intend to insure because the risk of loss is potentially greater in certain cases
insurance coverage litigation
what did someone disclose, and how was it treated
Terms of art
not common sense, cannot be logically applied
Occurrence Policy
if there is a loss during the policy period, it is covered. If it is outside, it is not covered
Claims made policy
even if the loss occurred outside the policy period, you are still covered
Declarations page
lists the coverage you have
liability coverage
if you are sued for a car crash, the company can pay if you are liable
Comprehensive coverage
covers everything other than you being at fault
Uninsured
if you are hit or injured by someone who has no insurance or coverage and you cannot adequately recover from their insurance, you can demand that your insurance pays for the damages
underinsured
other party has insurance but it isnt enough to cover damages
New Jersey mandatory minimums
Bodily injury and property damage liability
Personal Injury Protection $15,000
Duties of insurance company
duty to provide defense
duty to pay valid claims
“bad faith” denial claims
Duty to defend
obligation to provide legal defense for a claim made against the insured
duty to pay valid claims
duty to shareholders to only pay valid claims
“bad faith” denial claims
If an insurer simply refuses to pay for covered damages, the insurer is acting in bad faith
Contra Proferentem
states that an ambiguous contract term should be construed against the drafter of the contract
coverage
risk or liability that is covered
