Chapter 38: Insurance

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• Chapter 38 Insurance

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Insurance Policies

• Insurance is a contract, called a policy.
• Under an insurance policy, provision is made by
  the insurer, in consideration of premium
  payments, to pay the insured or beneficiary a sum
  of money if the insured sustains a specified loss
  or is subjected to a specified liability.

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The Contract
The Insurance Contract
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Insurance Agents Brokers

• Insurance contracts are made through an insurance
  agent or through an insurance broker.
• An insurance agent is an agent for the insurance
  company,
• An insurance broker is the agent of the insured
  when obtaining a policy for the latter.

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Insurable Interest

• The person purchasing an insurance contract must
  have an insurable interest in the insured life or
  property.
• An insurable interest in property exists when the
  damage or destruction of the property will cause
  a direct monetary loss to the insured.
• In the case of property insurance, the insured
  must have an insurable interest at the time of
  loss.
• An insurable interest in the life of the insured
  exists if the purchaser would suffer a financial
  loss from the insureds death.

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Subrogation
A Insurer B Insured C Third Party Who
Caused B to Sustain Loss
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Marine Policies

• Ocean marine policies insure ships and their
  cargoes against the perils of the sea.
• Inland marine policies insure goods being
  transported by land, by air, or on inland and
  coastal waterways.

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Fire Insurance

• In order for a fire loss to be covered by fire
  insurance, there must be an actual, hostile fire
  that is the immediate cause of the loss.
• The insurer is liable for the actual amount of
  the loss sustained up to the maximum amount
  stated in the policy.
• A homeowners insurance policy provides fire,
  theft, and liability protection in a single
  contract.

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Automobile Insurance

• Automobile insurance may provide protection for
  collision damage to the insureds property and
  injury to persons.
• It may also cover liability to third persons for
  injury and property damage, and loss by fire or
  theft.

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Life Insurance

• A life insurance policy requires the insurer to
  pay a stated sum of money to a named beneficiary
  upon the death of the insured.
• It may be a term insurance policy, a whole life
  policy, or an endowment policy.
• State law commonly requires the inclusion of an
  incontestability clause, whereby, at the
  conclusion of the contestability period, the
  insurer cannot contest the validity of the
  policy.