General Principles of Insurance Law Flashcards
a. The Drafting of Insurance Policies
i. The development of insurance policy standardization
1. Standard forms for standard pooled loss data on which to base premiums
ii. Insurance policy standardization today
1. Insurance Services Organization (ISO) helps to create standard forms
2. Property and casualty policies tend to be standardized
iii. Insuring agreement – part of the contract that commits the carrier to providing coverage
Binders and Policyholder Assent to Standardized Forms
i. Policyholders assent to policies they receive after purchase by not dropping coverage (assent by silence).
ii. Binder – insurer will provide coverage if there is a loss before the insurer issues a policy
1. Temporary policies that are replaced by the full policy once it is issued.
2. 9/11 binders involving World Trade Center
Contra proferentem
Construed against the drafter if no chance to negotiate
Default is that there is coverage, burden is on carrier to prove otherwise
Stone Container Corporation v. Hartford Steam Boiler Inspection and Insurance Co.
Insurance policy excluded explosions. But boilers were an exception to the exclusion. Was the pulp digester a boiler? District court ruled it ambiguous but didn’t let Hartford rebut the ambiguity.
An insurer is entitled to present evidence to clarify an ambiguity in an insurance policy before judgment is entered in favor of the insured. Words in a policy are given their plain meaning.
Vargas v. Insurance Company of North America
Aviation insurance policy only covered certain geographic locations, but the insurance company argued that it didn’t cover the areas in between the covered locations.
An ambiguous provision in an insurance policy should be construed in favor of the insurer if the insurer can establish that its interpretation is the only reasonable and fair construction of the provision.
Zacarias v. Allstate Insurance Company
Plaintiff’s boat liability insurance policy covered any damages caused by household family members operation of the boat, but didn’t cover bodily injuries to the household family members themselves.
Courts construe insurance contracts against the insurer and consistent with the insured’s reasonable expectations only if unclear, overly complicated, or written to trap unwary consumers.
Langwith v. American National General Insurance Company
Plaintiffs’ son’s driver’s license was suspended, so the insurance company dropped him from their auto coverage. To keep an umbrella policy, they excluded their son from coverage while driving their car. When he got his license back, the agent helped them get him coverage, but didn’t advise them that their son still wasn’t covered if he drove their car.
An insurance agent may owe a client a duty beyond a general duty to procure insurance requested by the client.
Roseth v. St. Paul Property and Liability Insurance Company
Plaintiff was hauling cattle and got into an accident, resulting in the death and injury of many head of cattle. The defendant’s policy only covered livestock killed in an accident, but their underwriter led plaintiff to believe that the injured cattle were also covered.
The doctrine of equitable estoppel does not prevent an insurance company from denying coverage to an insured if the estopping activity occurred after the inception of the insurance policy.
Benefits of group insurance
- Lower prices for coverage
- Employees get access to policies they may not be able to get on their own, even if they wanted to.
- ERISA – Employee Retirement Income Security Act of 1974
a. ERISA preempts state law for employers who provide group health insurance benefits
Silberg v. California Life Insurance Company
The plaintiff was injured while working for his landlord in exchange for reduced rent. His health insurance company withheld paying his medical bills until a determination of whether he would be covered under workman’s comp.
The covenant of good faith and fair dealing, which exists in every insurance contract, requires an insurance company to accept a reasonable settlement to absolve the insured of liability to a third person
