Chapter 42 - Insurance

Question 1

Insurance

Answer 1

• Protection against risk, transfer of risk.

Question 2

Insurer/Underwriter

Answer 2

• Who gives the insurance

Question 3

Insured

Answer 3

• Who buys the insurance

Question 4

Premiums

Answer 4

• What the insured pays to the insurer

Question 5

Claim

Answer 5

• If something bad happens, I make a claim.

Question 6

Rider/endorsement

Answer 6

• Rather than getting a brand new policy, I can get a rider to put on top of the policy.

Question 7

Insurable Interest

Answer 7

• Life
• Property
• Must have an insurable interest in it to get insurance.

Question 8

Country Life Insurance v. Marks

Answer 8

• Had a life insurance policy on Aunt Connie.
• When she died, Country Life said the Mark’s had no insurable interest.
• The Marks won because they did have an insurable interest in her.

Question 9

Life Insurance

Answer 9

1. Term Life: for a small period of time

2. Whole Life: for life. Premiums may stop

Question 10

Health Insurance

Answer 10

• Covers medical costs due to illness, accident, disease, etc.
• Dental often included

Question 11

Automobile Insurance

Answer 11

• Covers damage to the automobile, injuries, and property damage.
• “No fault” insurance laws cover injuries to the driver and passengers even if another party was at fault.
• Uninsured Motorist - cover the insured if the person at fault is uninsured.

Question 12

Homeowners Insurance

Answer 12

• Covers damage caused to home and attached buildings.

Question 13

Professional Liability/Malpractice Insurance

Answer 13

• Covers many professions where mistakes could happen.

Question 14

Business Interruption Insurance

Answer 14

• Covers cost incurred to get business back to normal operations in the event that an emergency occurs.

Question 15

Workers’ compensation

Answer 15

• Insurance that pays workers injured on the job.

Question 16

Disability Insurance

Answer 16

• Cover an insured’s lost wages in the event that they become disabled.

Question 17

Deductible

Answer 17

• Portion that the insured pays out of pocket before the insurance covers it.

Question 18

Indemnification

Answer 18

• Insurer will cover the insured for losses.

- Duty to Indemnify

Question 19

Incontestibility Clause

Answer 19

• Prevents insurers from contesting several years later statements made by the insured on an application.

Question 20

Duty to Defend

Answer 20

• Insurer will provide lawyer to defend me.

Question 21

Exclusions

Answer 21

• Criminal activity, riots, wars aren’t covered.

- “Acts of God”

Question 22

Right of Subrogation

Answer 22

• If an insurance company pays a claim to an insured, but someone else is at fault, the insurance company has a right to “step into the shoes” of the insured and sue the other company or person to get the money back.

Question 23

Metropolitan v. Morrison

Answer 23

• Teenager living at home with parents and he resisted arrest and injured an officer.
• The officer sued parents and their insurance policy.
• Insurance Company said that they wouldn’t cover it because it was a crime.
• Metropolitan Insurance did have a duty to defend the insured but didn’t.