Insurance Policy Conditions Flashcards
What is the point of insurance policy conditions?
Sets for the Rights and Responsibilities of the INSURED, the conditions are provisions inserted into the policy that qualify or place limitations on the insurer’s promise to pay/perform. If the policy conditions are not met, the insurer can deny a claim
Subrogation
when an insurer pays the insured for a covered loss, any rights of recovery from an at-fault party are transferred to the insurer
in other words, we can sue the at-fault instead of the NI
Assignment
A transfer of legal rights under, or interest in, an insurance policy to another party. One cannot transfer policy to another without company’s written permission.
Primary
policy pays first
Excess
other insurance must be exhausted then this policy will apply
Pro-rata
Will pay a proportion of a loss as it limits bear to the overall limits of coverage in force
Cancellation
Provides advance notice for valid reasons.
FL Lax governs specific requirements
Nonrenewal
most policies require that the insurer provide advance notice of non renewal with the notice requirement ranging in days depending on jurisdiction and circumstances surrounding the non renewal
Liberalization
If revision in policy form broadens coverage within 60 DAYS of inception or during policy period, without additional premium, insured receives the broadened coverage
Appraisal
A survey that determines value (not coverage) of property without legal action: Insured hires an independent appraiser and company hires independent appraiser, if they can not agree an umpire is hired and any 2 common decisions are binding
Arbitration
Procedure in which an ins company and the insured or a vendor agree to settle a claim dispute by accepting a decision made by a 3rd party
Mediation
A non-adversarial alternative dispute resolution procedure prompted by the need for effective, fair, and timely handling of propriety insurance claims. Mediation is non-binding however if a written settlement is reached, the insured has 3 business days to rescind the settlement unless the insured has cashed or deposited any check. Insurer bears all cost of mediation.
Abandonment
Insured cannot dump damaged property and request full value of property
Severability
Separations of Insureds: insurance applies separately/ equally to each insured as if other insureds did not exist
Loss Conditions in general
- Prompt Notice
- Cooperate
- Insured must preserve insurer’s rights
Loss Conditions for Property Insurance
- Take inventory of damaged property
- Use reasonable means to protect against further loss
- Show damaged property
- Provide records
- Be questioned under oath
- Report thefts to police
- Reveal other existing insurance
- Submit “PROOF OF LOSS” in a timely manner
Loss Conditions for Liability Insurance
- Notify insurer of claimant and witness
- Forward legal papers received
- Aid the insurer in settlement
- Avoid voluntary payments or assumption of obligations
Proof of Loss
Evidence offered by the insured to prove entitlement to collect the amount claimed; a statement, signed and sworn by the insured, setting forth the claim information required by the policy
Bases for insurer avoidance to perform after a covered act
- Intentional Acts
- Representation
Intentional Acts
illegal; will not permit insured to profit from their intentional acts
Representation
A statement made in an application for insurance that the prospective insured represents as being correct to the best of his or her knowledge
When will representations have legal effect (prevent recovery under the policy)?
- Warranty
- Misrepresentation
- Concealment of facts
The insurer can void a contract for misrepresentations, concealment, and breach of warranty BY STATUTE if:
fraudulent, they were material to accepting the risk, the insurer would not have issued knowing these risks
*In FL all statements on the apps are deemed to be representations and not warranties
Warranty
is a policy conditions based on the info on the application or inserted by the insurer
Ex: Applications states NI has alarm system, insurer inserts a provision that coverage is contingent on the alarm being maintained
Misrepresentation
An untrue statement on an application that does not become part of the policy
Ex: Have there been any accidents in the last 3 years? answers no but truth is yes, several
