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Chapter 38: Insurance


The Contract Insurance Agents & Brokers Insurance contracts are made through an insurance agent or through an insurance broker. ... Document presentation format: – PowerPoint PPT presentation

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Title: Chapter 38: Insurance

  • Chapter 38 Insurance

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.

The Contract
The Insurance Contract
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
  • An insurance broker is the agent of the insured
    when obtaining a policy for the latter.

Insurable Interest
  • The person purchasing an insurance contract must
    have an insurable interest in the insured life or
  • 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
  • An insurable interest in the life of the insured
    exists if the purchaser would suffer a financial
    loss from the insureds death.

A Insurer B Insured C Third Party Who
Caused B to Sustain Loss
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.

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

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

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