query: the contract that exists between the insurer and the insured

pos: Insurance policy the insured's particular circumstances are known as manuscript endorsements. Insurance policy In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language. Insurance contracts are designed to meet specific needs and thus have many features not found in many other types of contracts. Since insurance policies are standard forms, they feature

pos: Insurance loss. The loss may or may not be financial, but it must be reducible to financial terms, and usually involves something in which the insured has an insurable interest established by ownership, possession, or pre-existing relationship. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insurer will compensate the insured. The amount of money charged by the insurer to the insured for the coverage set forth in the insurance policy is called the premium. If the insured experiences a loss which is potentially covered by the insurance policy, the insured submits

pos: Insurance policy Insurance policy In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language. Insurance contracts are designed to meet specific needs and thus have many features not found in many other types of contracts. Since insurance policies are standard forms, they feature boilerplate language which is similar across a wide variety

pos: Insurance policy of different types of insurance policies. The insurance policy is generally an integrated contract, meaning that it includes all forms associated with the agreement between the insured and insurer. In some cases, however, supplementary writings such as letters sent after the final agreement can make the insurance policy a non-integrated contract. One insurance textbook states that generally "courts consider all prior negotiations or agreements ... every contractual term in the policy at the time of delivery, as well as those written afterward as policy riders and endorsements ... with both parties' consent, are part of the written policy". The textbook

pos: Cumis counsel the insurer's reservation of rights based on possible noncoverage under the insurance policy, the insurer must pay the reasonable cost for hiring independent counsel by the insured. The insurer may not compel the insured to surrender control of the litigation ... Disregarding the common interests of both insured and insurer in finding total nonliability in the third party action, the remaining interests of the two diverge to such an extent as to create an actual, ethical conflict of interest warranting payment for the insureds' independent counsel. The California State Legislature later enacted a statute governing the right of insured defendants

pos: Co-insurance lead office commission). Co-insurance Coinsurance in insurance, is the splitting or spreading of risk among multiple parties. In the U.S. insurance market, co-insurance is the joint assumption of risk between the insurer and the insured. In title insurance, it also means the sharing of risks between two or more title insurance companies. In health insurance, coinsurance is sometimes used synonymously with copayment, but copayment is fixed while the coinsurance is a percentage that the insurer pays after the insurance policy's deductible is exceeded, up to the policy's stop loss. It can be expressed as a pair of percentages with the

pos: Co-insurance Co-insurance Coinsurance in insurance, is the splitting or spreading of risk among multiple parties. In the U.S. insurance market, co-insurance is the joint assumption of risk between the insurer and the insured. In title insurance, it also means the sharing of risks between two or more title insurance companies. In health insurance, coinsurance is sometimes used synonymously with copayment, but copayment is fixed while the coinsurance is a percentage that the insurer pays after the insurance policy's deductible is exceeded, up to the policy's stop loss. It can be expressed as a pair of percentages with the insurer's portion stated

neg: South African insurance law insurer has the option either This election lies entirely with the insurer; the insured has no say in the matter. If the insurer elects reinstatement, it has the further option either When the insurer decides to reinstate, it must notify the insured, after which the election is binding; the insurer may not thereafter change its mind. Notice is to be given within the time allowed by the contract, or within a reasonable time: The insured has a duty to cooperate with the insurer in order to effect the reinstatement. Failure to cooperate would amount to breach of contract (as creditor).

neg: South African insurance law way the parties choose. For example, If a proposal form submitted to the insurer has not been authorised by the prospective insured, it may not serve as an offer by him. A policy issued by the insurer in response to such an unauthorised offer may, however, itself constitute an offer to be accepted by the proposed insured. It is also possible that the proposal by the prospective insured is not acceptable to the insurer as it stands, but that the insurer is willing to contract on other terms. In such a case, a counteroffer may be made by the insurer.

neg: Whole life insurance Whole life insurance Whole life insurance, or whole of life assurance (in the Commonwealth of Nations), sometimes called "straight life" or "ordinary life," is a life insurance policy which is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date. As a life insurance policy it represents a contract between the insured and insurer that as long as the contract terms are met, the insurer will pay the death benefit of the policy to the policy's beneficiaries when the insured dies. Because whole life policies are guaranteed to remain in

neg: Uberrima fides not exist... Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact, and his believing the contrary. Therefore, the insured must reveal the exact nature and potential of the risks that he transfers to the insurer (which may, in turn, be sold onto a reinsurer), while at the same time the insurer must make sure that the potential contract fits the needs of, and benefits, the insured. Reinsurance contracts (between reinsurers and insurers/cedents) require the highest level of utmost good faith, and such utmost good faith

neg: South African insurance law called non-indemnity insurance, but which is here referred to as "capital insurance." In the case of indemnity insurance, the contract between the parties provides that the insurer must indemnify the insured for patrimonial loss suffered as the proximate result of the occurrence of the event insured against. It is uncertain whether the event insured against (like fire or theft, for example) will actually occur, but it obviously must before loss can be quantified. In the context of indemnity insurance, examples of insurable interests include The purpose of the contract of indemnity insurance is to restore the insured to his position

neg: Insurance it and the insured in the claim handling process. An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance policy. Generally, an insurance contract includes, at a minimum, the following elements: identification of participating parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss),

neg: South African insurance law South African insurance law Insurance in South Africa describes a mechanism in that country for the reduction or minimisation of loss, owing to the constant exposure of people and assets to risks (be they natural or financial or personal). The kinds of loss which arise if such risks eventuate may be either patrimonial or non-patrimonial. A general definition of insurance is supplied in the case of "Lake v Reinsurance Corporation Ltd", which describes it as a contract between an insurer and an insured, in terms of which the insurer undertakes to render to the insured a sum of money, or

neg: Annuity (American) Annuity (American) In the United States, an annuity is a contractually executed, relatively low-risk investment fund, where the insured (usually, an individual) pays a life insurance company a lump-sum premium at the start of the contract. That money is to be paid back to the insured in fixed, incremental amounts, over some future period (predetermined by the insured). The insurer invests the premium; the resulting profit/return on investment funds the payments received by the insured and compensates the insurer. Conventional annuity contracts provide a predictable, guaranteed stream of future income (e.g., for retirement) until the death(s) of the beneficiaries(s) named

neg: ERISA reimbursement ERISA reimbursement ERISA Reimbursement is the terminology utilized to describe an ERISA Plan’s effort to require that it be paid back for medical bills expended on behalf of a Participant or Beneficiary of the ERISA Plan. The concept of “reimbursement” can be traced to the traditional doctrine of “Subrogation,” but it exists today without the traditional safeguards established in the development of the law concerning subrogation. When an insurer pays a claim to an insured, the insurer generally has the right to “step in the shoes” of the insured for the purpose of recapturing that money by pursuing a claim

neg: Life insurance On April 17, 2016, a report by "60 Minutes" claimed that life insurance companies do not pay significant numbers of beneficiaries. Life insurance Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policy holder). Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays

neg: South African insurance law right. This is not the case with cession, which involves a transfer of the right in terms of an actual agreement. The effect of this difference or distinction is that, if the insured waives his right to claim against a third-party wrongdoer, the insurer would not be able to claim against the wrongdoer, as the latter is absolved of duty to pay. With cession, in contrast, the insurer acquires all of the rights of the insured to proceed against the third party, and has to sue in its own name. If a reinstatement clause exists, and if loss occurs, the

neg: Exclusive provider organization providers get a steady stream of business. An EPO earns additional money by charging an access fee to the insurer for use of the network. It also negotiates with the medical care providers of the organization in order to set fee schedules and help resolve disputes between the insurer and medical care providers. Sometimes EPOs even contract with one another to strengthen their businesses and positions in a certain geographic area. The beneficial relationship between medical care providers and the insurer often transfers to the insured subscriber because lower rates of medical services means lower rates of increase in monthly

neg: South African insurance law a deletion or addition: for example, by way of endorsements, to be effected in respect of the insurer's standard form of contract. The premium is not normally recorded in the proposal form. Most other terms of the proposed contract are also not expressly stated, the intention being to contract on the usual terms of the insurer. In determining the usual terms of the insurer, evidence of other policies issued by the insurer is admissible. Once a reference to the usual terms is included in the contract, the insured actually agrees to them; he cannot afterwards be heard to say that

neg: Ab initio judicial declaration to that effect. An insurer facing a claim from an insured who had deceived the insurer on a material fact would claim that the insurance contract was void "ab initio"; it was null and void from the beginning and that since there was no legally enforceable contract, the insurer ought not to have to pay. Ab initio Ab initio ( ) is a Latin term meaning "from the beginning" and is derived from the Latin "ab" ("from") + "initio", ablative singular of "initium" ("beginning"). , from L., lit. "from the beginning", from ablative case of "initium" "entrance, beginning",

neg: Life insurance Life insurance Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policy holder). Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum. Other expenses, such as funeral expenses, can also be included in the

neg: Insurance law seems valid in the contract or policy, the insurer refuses to pay out for an unreasonable amount of time, the insurer lays the burden of proof on the insured - often in the case where the claim is unprovable. Other issues of insurance law may arise when price fixing occurs between insurers, creating an unfair competitive environment for consumers. A notable example of this is where Zurich Financial Services - along with several other insurers - inflated policy prices in an anti-competitive fashion. If an insurer is found to be guilty of fraud or deception, they can be fined either

neg: Uberrima fides is considered the foundation of reinsurance, which is an essential component of the modern insurance marketplace. In order to make reinsurance affordable, a reinsurer cannot duplicate costly insurer underwriting and claim handling costs, and must rely on an insurer’s absolute transparency and candor. In return, a reinsurer must appropriately investigate and reimburse an insurer’s good faith claim payments, following the fortunes of the cedent. The fact that a contract is one of utmost good faith does not mean, however, that it gives rise to a general fiduciary relationship. The relationship between insured and insurer is not akin to the relationship

neg: Perpetual insurance Perpetual insurance Perpetual insurance is a type of homeowners insurance policy written to have no term, or date, when the policy expires. From the effective start date, the coverage exists for perpetuity. The insured deposits money, called a deposit premium, with the insurer for insurance for the life of the risk. The deposit is many times larger than the cost of a non-refundable, annual premium for an equivalent policy with a one-year term. The insurer must earn enough income from investing the deposits to cover losses and operating expenses for the model to be economically viable. Upon cancellation, the insured

neg: After acquired property clause clause allows insurance coverage for property the insured obtains after ratification of the policy or contract. This clause may operate only for a temporary period of time during which the insured must notify the insurer of the property so that the insurer can adjust the premiums accordingly. An example is the purchase of a new vehicle; the clause allows the vehicle to be covered for a short period of time until the owner can notify the insurance company of the purchase and provide the vehicle information (along with any vehicles that were traded in and thus to be removed from

neg: Loss payee clause they are most common in maritime insurance in relation to insuring mortgaged vessels. As a matter of practicality, such clauses are usually appended to the end of existing policies in a separate addendum after being negotiated between the insurer and the mortgagee. Loss payee clause A loss payee clause (or loss payable clause) is a clause in a contract of insurance that provides, in the event of payment being made under the policy in relation to the insured risk, that payment will be made to a third party rather than to the insured beneficiary of the policy. Such clauses are

neg: QC clause QC clause In insurance law, a QC clause is a clause in an insurance policy (usually but not exclusively a professional indemnity insurance policy) that provides that an action against the insured is not to be contested unless a Queen's Counsel (or QC) advises that the defence has a reasonable prospect of success. The principal reason for such clauses is to minimise conflict between the insured and the insurer. The insurer will often wish to settle claims as quickly and cheaply as possible, but the insured may be concerned that paying on a claim implies negligence which will damage their

neg: Cumis counsel of interest, which in turn meant that the insured now had a right to independent counsel. "Cumis" concluded as follows: We conclude the Canons of Ethics impose upon lawyers hired by the insurer an obligation to explain to the insured and the insurer the full implications of joint representation in situations where the insurer has reserved its rights to deny coverage. If the insured does not give an informed consent to continued representation, counsel must cease to represent both. Moreover, in the absence of such consent, where there are divergent interests of the insured and the insurer brought about by

neg: Liability insurance the agreement in between insurer and insured which protects the insured against any liability, damage or loss. The duty to indemnify is the insurer's duty to pay all covered sums for which the insured is held liable, up to the limits of coverage and subject to any deductibles, retained limits, self-insured retention, excess payments, or any other amounts of money which the insured is required to pay out-of-pocket as a precondition to the insurer's duty. It is generally triggered when a final judgement is entered against the insured, and it is satisfied when the insurer pays such covered amounts to

neg: Term life insurance the duration of the contract. This cost is based on the summed cost of each year's annual renewable term rates, with a time value of money adjustment made by the insurer. Thus, the longer the period of time during which the premium remains level, the higher the premium amount. This relationship exists because the older, more expensive to insure years are averaged, by the insurance company, into the premium amount computed at the time the policy is issued. Most level term programs include a renewal option, and allow the insured person to renew the policy for a maximum guaranteed rate

neg: Liability insurance there is some evidence apparently linking the insured to the plaintiff's alleged injuries), the plaintiff has evidence of substantial damages which may exceed policy limits, and the plaintiff makes a settlement demand (either to the insured or directly to a defending insurer) which equals or exceeds policy limits. In that situation, the insurer's interests conflict with the insured's interests, because the insurer has an incentive to "not" immediately settle. That is, if the insurer refuses to settle and the case then goes to trial, there are only two possible outcomes: (1) the insured loses and the insurer must pay the

neg: Barkhuizen v Napier Barkhuizen v Napier Barkhuizen v Napier is an important case in South African contract law, decided by the Constitutional Court on 4 April 2007, having been heard on 4 May 2006. The judges were Langa CJ, Moseneke DCJ, Madala J, Mokgoro J, Ngcobo J, Nkabinde J, O'Regan J, Sachs J, Skweyiya J, Van Der Westhuizen J and Yacoob J. When the applicant (the insured) instituted action in a High Court against the respondent (the insurer) on a short-term insurance contract, the insurer raised a special plea that it had been released from liability under the contract, since the applicant had

neg: South African insurance law rights of the insured against third parties. The insurer may take charge of litigation against third parties liable for loss to the insured. The proceedings are in the name of the insured, with the insurer as "dominus litis". Subrogation, then, is essentially a right of recourse without transfer of rights. The objectives of subrogation are as follows: The following are the requirements of subrogation: The insurer has a right of recourse against a third party for loss where the insurer has paid the insured the cover for such loss. The insurer may institute a claim against the third party on

neg: South African insurance law "quo ante". Nothing more than patrimonial indemnity may be recovered, as is illustrated by the rules on over-insurance and double insurance. The insured is not entitled to make a profit out of his loss. It is accordingly said that the principle of indemnity governs indemnity insurance. In the case of capital or non-indemnity insurance, the insurer undertakes to pay to the insured a specified amount, or periodical amounts, upon the happening of the event insured against: for example, R5,000 if the insured dies or loses a limb. This is generally non-patrimonial loss. On the face of it, the contract does

neg: Insurance law has been interpreted in England, is that the prospective insured must accurately disclose to the insurer everything that he knows and that is or would be material to the reasonable insurer. Something is material if it would influence a prudent insurer in determining whether to write a risk, and if so upon what terms. If the insurer is not told everything material about the risk, or if a material misrepresentation is made, the insurer may avoid (or "rescind") the policy, i.e. the insurer may treat the policy as having been void from inception, returning the premium paid. Reinsurance contracts (between

neg: Liability insurance to settle by at least making an attempt to bring about a settlement in which it would have to pay only its policy limits (either because the plaintiff agrees to lower their demand or the insured or another primary or excess insurer agrees to contribute the difference). Generally, an insurer who breaches any of the foregoing duties will be held liable for breach of contract. In most jurisdictions, the result is a judgment requiring payment of the insured's expectation damages—the sums that the insurer should have paid under its duty to indemnify. But this will be circumscribed by the policy

neg: South African insurance law loss insured against has occurred. If an insurer repudiates liability for a claim, the insured has a specific time period within which to issue summons against the insurer, failing which the insurer will be released from liability: that is to say, the claim against the insurer will prescribe. The purpose of time-bar clauses is to provide legal certainty for the insurer. An insurer has an interest in knowing, within a reasonable time after repudiating a claim, whether it will face litigation or not. In "Barkhuizen v Napier", a short-term insurance policy contained a time-bar clause to the effect that the

neg: Subrogation is responsible for the loss. This is subrogation in its proper or core sense. Insurance subrogation, and, specifically, the types and amounts of payments that can be recovered, differs from jurisdiction to jurisdiction. Secondly, after paying out under a policy of indemnity insurance, an insurer may be entitled to sue the insured where the insured has already had his loss made good by the third party tortfeasor. That is, the insurer has a claim against the insured so as to ensure that the insured does not get double recovery. This situation might arise if, for example, an insured claimed in

neg: South African insurance law the public (by invoking the aid of intermediaries or otherwise) to apply for insurance. The actual offer to contract is accordingly made by the proposed insured, almost invariably on a printed form issued by the insurer and completed or signed by the proposer. As formulated by insurers, this proposal form does not usually leave much room for bargaining between the parties. What bargaining there is usually is confined to matters which cannot be settled in advance, such as the amount of the insurance, the period of insurance and special circumstances relating to the risk. Occasionally the proposed insured may request

neg: South African insurance law his entire loss from one insurer, or a proportionate share from each insurer, as long as the total amount claimed is not greater than the loss actually suffered. Most policies have a “contribution clause,” which means that, if an insurer pays more than its proportionate share to the insured, the insurer has a right to reclaim a contribution from the other insurers. This is because the insurer has the right to pay only its proportionate share of the loss. Insurance contracts often contain clauses to the effect that the insured must disclose other existing or subsequent policies. In the absence

neg: Co-insurance first, or just a single percentage showing what the insured pays. The percentage due from the insured can range up to 100% (100% meaning the insured pays all costs until reaching the out of pocket maximum). Once the insured's out-of-pocket expenses equal the stop loss the insurer will assume responsibility for 100% of any additional costs. 70–30, 80–20, and 90–10 insurer-insured coinsurance schemes are common, with stop loss limits of $1,000 to $3,000 after which the insurer covers all expenses. Coinsurance is a penalty imposed on the insured by the insurance carrier for underreporting/declaring/insuring the value of the tangible property

neg: Nonadmitted and Reinsurance Reform Act of 2010 does not define "property and casualty insurance" and does not apply to workers' compensation insurance, excess insurance for self-funded workers' compensation plans with a nonadmitted insurer, or risk retention groups.; The NRRA defines "home state" as: (1) the state in which an insured maintains its principal place of business or, in the case of an individual, the individual's principal residence; or (2) if 100% of the insured risk is located out of the state, the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated. If more than one insured from an affiliated

neg: Liability insurance ensuing judgment against the insured up to the policy limits, or (2) the insured wins, meaning both the insured and the insurer bear no liability. If the first outcome occurs, then it is essentially "nothing gained nothing lost" from the insurer's point of view, because either way it will pay out its policy limits. (For simplicity, this analysis disregards sunk costs in the form of defense costs incurred to that point, as well as additional costs sustained by the insurer in defending the insured to a verdict at trial, and opportunity costs sustained by the insured while participating in trial.)

neg: Suva (insurer) to insureds in the form of premium reductions. Its three missions are prevention, insurance and rehabilitation. About half of people working in Switzerland are insurance by the Suva in case of accidents (128,000 companies and 2,000,000 people insured). Unemployed people are insured against accidents by the Suva. Since 2005, the Swiss Armed Forces are also insured against accidents by the Suva. Suva (insurer) The Suva, headquartered in Lucerne, is the Swiss National Accident Insurance Fund. It is a public-sector insurer and leading provider of health care coverage for employees in case of accidents in Switzerland. The name is the abbreviation

neg: Insurance law As a result, most legal systems worldwide apply common-law principles to the adjudication of commercial insurance disputes, whereby it is accepted that the insurer and the insured are more-or-less equal partners in the division of the economic burden of risk. Most, and until 2005 all, common law jurisdictions require the insured to have an insurable interest in the subject matter of the insurance. An insurable interest is that legal or equitable relationship between the insured and the subject matter of the insurance, separate from the existence of the insurance relationship, by which the insured would be prejudiced by the occurrence

neg: Liability insurance relief from a court before declining to defend its insured (e.g., Illinois) or withdrawing from its defense pursuant to an earlier reservation of rights (e.g., Georgia). Finally, the insurer can decline to defend and also refrain from seeking declaratory judgment. If the insurer is absolutely certain that there is no coverage or no potential for coverage, then in most jurisdictions the insurer adequately preserves its defenses to coverage by sending a letter to the insured explaining its position and declining to provide a defense. But this option can be very risky, because if a court later determines that there was

neg: Liability insurance also seek a declaratory judgment against the insured that there is no coverage for the claim, or at least no potential for coverage. This option generally allows the insurer to insulate itself from a bad faith claim, in the sense that an insurer acts in good faith when it promptly brings coverage disputes to the attention of a court, even though it also places the insured in the awkward position of defending itself against "two" lawsuits: the plaintiff's original complaint and the insurer's complaint for declaratory judgment. Indeed, in some jurisdictions an insurer acting in good faith "must" seek declaratory

neg: Reservation of rights the claim even while the company is investigating the claim or beginning to treat the claim as if it were covered. If the insurance company later decides to deny coverage, it cites the original reservation of rights as the warning that it might do so. An insurer’s reservation of rights is an important legal step, particularly in the context of liability insurance. The insurer may provide a defense to the insured, seemingly protecting the insured from the serious liabilities that may result from a civil suit. The liability insurer is alerting the insured defendant that insurance may ultimately not cover

neg: Finite risk insurance Finite risk insurance Finite risk insurance is the term applied within the insurance industry to describe an alternative risk transfer product that is typically a multi-year insurance contract where the insurer bears limited underwriting, credit, investment and timing risk. The assessment of risk is often conservative. The insurer and the insured share in the net profit of the transaction, including loss experience and investment income. The premium is generally well in excess of the present value of a conservative estimate of loss experience. The policy generally contains retrospective rating provisions such as Finite risk insurance excludes products expressly sold as

neg: Duty to settle this duty is that "[w]hen an offer is made to settle a claim in excess of policy limits for an amount within policy limits, a genuine and immediate conflict of interest arises between carrier and assured." "An insurer who denies coverage does so at its own risk. Such factors as a belief that the policy does not provide coverage, should not affect a decision as to whether the settlement offer in question is a reasonable one." "It is the duty of the insurer to keep the insured informed of settlement offers." "[A]n insurer potentially can be liable for unreasonably coercing

neg: Uberrima fides between, say, guardian and ward, principal and agent, or trustee and beneficiary. In these latter instances, the inherent character of the relationship is such that the law has traditionally imported general fiduciary obligations. The insurer-insured relationship is contractual; the parties are parties to an arms-length agreement. The principle of "uberrima fides" does not affect the arms-length nature of the agreement, and cannot be used to find a general fiduciary relationship. The insurance contract, as noted above, imposes certain specific obligations on its parties. These obligations, however, do not import general fiduciary duties into each and every insurance relationship. Before such

neg: Insurance policy also states that the policy must refer to all papers which are part of the policy. Oral agreements are subject to the parol evidence rule, and may not be considered part of the policy if the contract appears to be whole. Advertising materials and circulars are typically not part of a policy. Oral contracts pending the issuance of a written policy can occur. The insurance contract or agreement is a contract whereby the insurer promises to pay benefits to the insured or on their behalf to a third party if certain defined events occur. Subject to the "fortuity principle", the

neg: Finite risk insurance requires or strongly encourages the insured to pay the insurer some calculable amount as a result of losses paid or incurred under that insurance or reinsurance contract, excluding provisions for additional premium due to changes in exposure or policy audit. "Commutation provision" means a verbal or written agreement, whether or not formally incorporated into an insurance or reinsurance policy, that allows the policyholder to commute the policy, usually implying that all liabilities and rights created by that contract are extinguished in return for the balance of an experience account. Generally provisions such as "profit sharing" or "low claims bonus," which

neg: Insurance bad faith denying the claim (i.e., when the insurer had already acquired information showing a potentially covered claim and denied it anyway). In other words, they contended that only "intentional" mistreatment of an insured should be actionable in bad faith, versus merely grossly "negligent" claim handling. In 1979, California's highest court refuted that argument and further expanded the scope of the tort by holding that inadequate "investigation" of a claim was actionable in tort as a breach of the implied covenant of good faith and fair dealing. Other state courts began to follow California's lead and held that a tort claim exists

neg: South African insurance law Although limited in duration, interim insurance is nothing less than a fully-fledged contract of insurance. This being so, the proposed insured must observe the usual duty of good faith towards his insurer. Similarly, the contract must comply with all the requirements for the validity of insurance contracts in general. The contract of interim insurance is separate from and independent of the final contract of insurance following on the conclusion of an interim contract, although it may share some or most of the terms of the final contract. If a claim arises during the currency of the interim contract, it must

neg: Agent of record Agent of record An agent of record (AOR) is an individual or a legal entity with a duly executed contractual agreement with an insurance policy owner, in line with the prevailing legal norms and regulations of the region in which the contract was entered. The agent of record has a legal right to receive commissions from the respective insurance policy. The individual or legal entity is authorized to represent an insured party in purchasing, servicing, and maintaining insurance coverage with a designated insurer. The majority of insurance companies will not disclose information or discuss an insured party's account with an

neg: South African insurance law of such a clause, the insured is under no obligation to disclose policies that he may have with other insurance companies. The following are the requirements for the insurer's right to contribution: Where the insurance contracts in a situation of double insurance are virtually identical in all material respects (including the amount insured), loss is to be apportioned equally between the insurers. Where the contracts differ only as to the amounts insured, all the amounts must be added up and compared with the amount of the loss. Each insurer is then liable for such a proportion of the loss as

neg: South African insurance law important: If, then, the warranty is not based on a “representation,” or “failure to disclose” or “non-disclosure,” the insurer will still be able to avoid liability under the contract. As a general rule, the words “representation,” “failure to disclose” and “non-disclosure” refer to existing facts as well as to future events. The controversy of granting damages for misrepresentation of a future event has generally been removed by statutory reform. The question of materiality is of assistance here. Subrogation is the right of the insurer, having indemnified the insured in terms of the policy, to receive the benefit of all the

neg: South African insurance law The strict common-law approach, which requires exact performance of an undertaking that has not necessarily been established as a “material” aspect of the contract (and risk assessment), and entitles the insurer to cancel a contract on the basis of a breach of warranty despite the fact that the representation complained of concerns an immaterial inaccuracy, or a matter with no bearing at all on the risk insured against, has led to absurd results in some cases. "Jordan v New Zealand", discussed above, is one such example: Jordan stated that his age at his next birthday would be twenty-two, whereas in

neg: International commercial law shipowner, the charterer or the freight forwarder. A distinction is made between the physical carrier and the legal carrier, the person contractually responsible for the carriage. If the consignee is suing on an implied contract of carriage or there is negligent carriage of goods, it is the physical carrier against whom action is brought. Insurance against perils is an important aspect of international commercial transactions. In the event of loss or damage to cargo due to hazards during voyage, an insured party will be able to recover losses from the insurer. The type of insurance required depends on the mode

neg: Liability insurance a duty to defend all along, then it will hold that the insurer necessarily breached that duty, and may also hold that the insurer is subject to tort liability for bad faith. So insurers will often defend under a reservation of rights rather than decline coverage altogether. Outside of the United States and Canada, liability insurers generally do not assume a duty to defend, in the sense of assuming a direct responsibility for hiring and paying a lawyer to defend the insured. Many write policies which promise to reimburse the insured for reasonable defense costs incurred with the insurer's consent,

neg: Home insurance $9 for claims settlement expenses, and the remaining $25 was allocated to insurer expenses. One study of fires found that most were caused by heating incidents, although smoking was a risk factor for fatal fires. After a loss, the insured is expected to take steps to mitigate the loss. Insurance policies typically require that the insurer be notified within a reasonable time period. After that, a claims adjuster will investigate the claim and the insured may be required to provide various information. Filing a claim may result in an increase in rates, or in nonrenewal or cancellation. In addition, insurers

neg: English contract law v Boehm", Mr Carter bought an insurance policy for any losses to a naval fort of the British East India Company in Sumatra, but failed to tell his insurer, Boehm, that the fort was only built to resist attacks from locals, and the French were likely to invade. Lord Mansfield held the policy was invalid. Since insurance is a contract based on speculation and the special facts "lie most commonly in the knowledge of the insured only", good faith precluded Mr Carter "concealing what he privately knows". The same policy was extended for sale of shares in a company. So

neg: IFRS 4 2017 and will become effective on January 1, 2021, supplanting IFRS 4 at that time. Generally, IFRS 4 permitted companies to continue previous accounting practices for insurance contracts, but did enhance the disclosure requirements. IFRS 4 defines an insurance contract as a "contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder." The standard provides definitions to distinguish "insurance risk" from "financial risk." IFRS 4 exempts insurance companies from certain other IFRS standards, including IAS

neg: Liability insurance is prevalent in the United States and Canada, where most liability insurance policies provide that the insurer "has the right and duty" to defend the insured against all "suits" to which the policies apply. It is usually triggered when the insured is sued (or in some instances, given pre-suit notice that they are about to be sued) and subsequently "tenders" defense of the claim to its liability insurer. Usually this is done by sending a copy of the complaint along with a cover letter referencing the relevant insurance policy or policies and demanding an immediate defense. In most U.S. states

neg: Insurance and exclusions (events not covered). An insured is thus said to be "indemnified" against the loss covered in the policy. When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a claim against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the premium. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims – in theory for a relatively few claimants – and for overhead costs. So

neg: Insurance Insurance Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter. A person or entity who buys insurance is known as an insured or as a policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate the insured in the event of a covered

neg: Insurance Insurance Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter. A person or entity who buys insurance is known as an insured or as a policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate the insured in the event of a covered

neg: Insurance bad faith under certain circumstances, a liability insurer may ultimately find itself in a trial where it is being sued "directly" by the plaintiff who originally sued its insured. This is allowed through two situations: assignment or direct action. The first situation is where an insured abandoned in bad faith by its liability insurer makes a special settlement agreement with the plaintiff. Sometimes this occurs after trial, where the insured has attempted to defend himself or herself by paying for a lawyer out of pocket, but went to verdict and lost (the actual situation in the landmark "Comunale" case); other times it

neg: Insurance in the United States claims settlement expenses, and the remaining $25 was allocated to insurer expenses. One study of fires found that most were caused by heating incidents, although smoking was a risk factor for fatal fires. After a loss, the insured is expected to take steps to mitigate the loss. Insurance policies typically require that the insurer be notified within a reasonable time period. After that, a claims adjuster will investigate the claim and the insured may be required to provide various information. Filing a claim may result in an increase in rates, or in nonrenewal or cancellation. In addition, insurers may share

neg: QC clause professional reputation, and want to contest the claim regardless. Professional indemnity policies commonly provide that the insurer will pay the legal costs of the defence. It is sometimes suggested that the clause is also designed to protect the public from the unjustified contesting of claims which have no real defence, but this may represent a charitable view of the way insurance companies conduct claims. Conflicts between the insurer and insured can put a solicitor who represents both in an invidious position, particularly where the solicitor has received confidential information from one party, and may result in multiplicity of legal representation.

neg: Agent of record agent other than the Agent of Record. An insured party wishing to change insurance agent(s) must submit a revised agent of record letter to the respective insurer authorizing said insurer to release the insured party's information and to discuss the insured party's coverage with the newly appointed agent. Relevant documents may be executed via hard copy documents or, alternatively, electronically in jurisdictions where electronic execution is legal. Applications may be made electronically, as well as in physical form. An Agent of Record letter can, in some cases, be used as an insurance sales tool, though some question its legality. In

neg: South African insurance law of the aerodrome to pole and power lines, which constituted a hazard to aircraft using the aerodrome at night. The court held that there is a duty on the insured and the insurer to disclose to each other, prior to the conclusion of the contract of insurance, every fact relative and material to the risk or to the assessment of the premium. The duty of disclosure relates to material facts, of which parties had actual or constructive knowledge prior to the conclusion of the contract of insurance. Breach of the duty of disclosure amounts to "mala fides" or fraud, and

neg: QC clause successfully defending the claim. QC clauses were considered judicially by Lord Devlin (in relation to another issue) in "West Wake Price & Co v Ching" [1956] 3 All ER 821. QC clause In insurance law, a QC clause is a clause in an insurance policy (usually but not exclusively a professional indemnity insurance policy) that provides that an action against the insured is not to be contested unless a Queen's Counsel (or QC) advises that the defence has a reasonable prospect of success. The principal reason for such clauses is to minimise conflict between the insured and the insurer. The

neg: Liability insurance This duty is generally triggered only if a reasonable opportunity to settle actually arises, either because the plaintiff makes a settlement offer, or the insurer is aware of information to the effect that the plaintiff would accept a settlement offer. The insurer is neither required to initiate an offer to a plaintiff likely to refuse it, nor required to accept an outrageous offer from a plaintiff who filed a frivolous lawsuit and cannot prevail against the insured under any theory. The duty to settle is of greatest import in the scenario where the insured may have some liability exposure (i.e.,

neg: Insurance settlement with the insurance company on their behalf. For policies that are complicated, where claims may be complex, the insured may take out a separate insurance policy add-on, called loss recovery insurance, which covers the cost of a public adjuster in the case of a claim. Adjusting liability insurance claims is particularly difficult because there is a third party involved, the plaintiff, who is under no contractual obligation to cooperate with the insurer and may in fact regard the insurer as a deep pocket. The adjuster must obtain legal counsel for the insured (either inside "house" counsel or outside "panel"

neg: Perpetual insurance the single deposit premium would be $1,389, less the after-tax returns that would have been earned on investing the deposit premium (or $600, assuming a 6% after-tax rate of return) divided by $10,000, in other words, 7.89%. Perpetual insurance Perpetual insurance is a type of homeowners insurance policy written to have no term, or date, when the policy expires. From the effective start date, the coverage exists for perpetuity. The insured deposits money, called a deposit premium, with the insurer for insurance for the life of the risk. The deposit is many times larger than the cost of a non-refundable,

neg: Bond insurance or holding insured securities is based upon (i) the additional payment source provided by the insurer if the issuer fails to pay principal or interest when due (which reduces the probability of a missed payment to the joint probability that both the issuer and insurer default), (ii) rating downgrade protection so long as the insurer is more highly rated than the issuer, (iii) improved market liquidity, and (iv) services provided by the insurer such as credit underwriting, due diligence, negotiation of terms, surveillance, and remediation. Bond insurers generally insure only securities that have underlying or "shadow" ratings in the investment

neg: Bond insurance were spared the burdens of negotiating or litigating to defend their rights. The first monoline insurer, American Municipal Bond Assurance Corporation (now Ambac), was formed in 1971 as an insurer of municipal bonds. Municipal Bond Insurance Association (now MBIA) was formed in 1973. The companies sought to help municipalities and other public entities secure better access to cheaper funding. By 1980, about 2.5% of long-term municipal bonds were insured. As the number and size of insured bond issues grew, regulatory concern arose that bond defaults could adversely affect even a large multiline insurer's claims-paying ability. In 1975, New York City

neg: South African insurance law Reinstatement may therefore be described as "direct compensation", because the purpose of reinstatement is to put the insured in the same or similar position as before the loss occurred. One insurance company may purchase insurance from another insurance company for the purposes of risk management. Reinsurance has the effect of transferring the risk—that is to say, the "insured risk"—from the insurer to the reinsurer. This allows the insurer to increase its policy limits, taking on a higher risk, since the risk is partly carried by the reinsurer. The two main categories of reinsurance arrangements are Within these two categories, furthermore,

neg: Exchanging contracts Exchanging contracts Exchanging contracts is the final step in house purchase, under English law, and occurs after a solicitor has carried out all necessary searches and there is agreement to the contract terms. Once each party has signed the contracts and they have been exchanged, they are binding. The contracts will include a completion date, which is the date that the property becomes acquired by the purchaser. At exchange of contracts, any deposit needed has to be paid, and arrangements for building insurance must be made so that the property is insured from that day. Usually, the present insurer will

neg: Life insurance benefits. Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil commotion. Modern life insurance bears some similarity to the asset management industry and life insurers have diversified their products into retirement products such as annuities. Life-based contracts tend to fall into two major categories: An early form of life insurance dates to Ancient Rome; "burial clubs" covered the cost of members' funeral expenses and

neg: Eugene Anderson became ill and filed claims many years after they had first come into contact with the material. Companies that tried to make claims to cover their costs found that business insurers would pass the buck. A company that had used different insurers over the years would find that firms would say that the insurer who should be responsible was either the one who insured the company when the individual was exposed, or the one that was the insurer when the person became ill, or the one who provided coverage when the person filed suit or sought coverage. Each insurer would

neg: American Bankers Association bill HR384 is a bill that would amend the Federal Home Loan Bank Act to treat certain privately insured credit unions as insured depository institutions for purposes of determining eligibility for membership in a federal home loan bank. Richards testified that the ABA has "concerns about privately-insured credit unions being allowed to join a Federal Home Loan Bank." According to Richards, "the issue of concern is the financial viability of the private insurer to a failure of a non-federally-insured credit union that has a significant level of secured advances from the Federal Home Loan Bank." The American Bankers Association website

neg: Guaranteed investment contract insurance companies to write insurance on GICs. Thus if the GIC issuer failed, the monoline insurer could pay back investors instead. Insured GICs were called "wrapped" GICs. In the late 2000s, AIG, a holding company and not an insurance company, was bailed out by the federal government to the tune of over a hundred billion dollars. The NY Times reported that some of the government money (at least 9 billion dollars) was used to pay out on "Guaranteed Investment Agreement" contracts that AIG had sold to investors. In 2010 many GIC sellers were sued by counties such as Los Angeles

neg: South African insurance law behalf of the insured as "dominus litis". The insurer also has a right to information and assistance from the insured, together with a right to preservation of the claim, which usually takes the form of a clause in insurance contracts which requires the insured to take the necessary steps to protect the insurer's right to subrogation (even if the requirements for subrogation have not yet been met in full). In "Commercial Union v Lotter", the court held that the fact that the insured vehicle was a stolen vehicle compromised the appellant's right of subrogation. Having satisfied the claim of the

neg: Self-insurance that person's eligible healthcare claims. All risk transfers to the insurer; no matter how much is racked up in eligible claims, the insurer bears the risk of paying those claims and the insured can rest easy knowing that he or she will not be responsible. In self-funded health care, plan sponsors have broad discretion to determine what terms will be used in the plan, as well as to decide which entities will have the authority to make benefits determinations, factual determinations, appeals determinations, and language interpretations. In traditional insurance, those responsibilities (and risks) are all borne by the insurer. Part

neg: Knock-for-knock agreement Knock-for-knock agreement A knock-for-knock agreement is an agreement between two insurance companies whereby, when both companies' policy-holders incur losses in the same insured event (usually a motor accident), each insurer pays the losses sustained by its own policy-holder regardless of who was responsible. The rationale is economic and administrative efficiency: While an insurer may be able to pursue a recovery from the party responsible for an accident or from its policy-holder, this is a costly administrative procedure. The knock-for-knock agreement simplifies recovery claims among insurers and, over time, attributes costs fairly among insurers. However, knock-for-knock agreements between insurers have been

neg: Deductible the insured to the insurer. Due to the complexity of identifying these third party deductible receivables, many are often missed by the insurer causing millions of dollars to go uncollected. Most health insurance policies and some travel insurance policies have deductibles as well. The type of health insurance deductibles can also vary, as individual amounts and family amounts. Given the nature of medical treatment, the insured often faces multiple medical expenses spread over several days for a single illness or injury. Due to this reason, health insurance deductibles often tend to be imposed on a term basis (e.g. annually) as

neg: Insurance bad faith known to the insurer from any source; if those facts when read together with the complaint show that at least one claim is potentially covered (that is, the complaint actually alleges a claim of the kind which the insurer promised to defend or could be so amended in light of the known facts), the duty to defend is thereby triggered and the insurer must undertake the defense of its insured. This powerful bias in favor of finding coverage is one of the major innovations of U.S. law. Other common law jurisdictions outside of the U.S. continue to construe coverage much

neg: Cumis counsel at arm's length (so that privileged information "never" reaches the insurer). The advantage of the second option is that by assuming complete responsibility for the defense of its insured, the insurer has more control over defense costs. Most insurers operate so-called "captive" law firms (carefully designed to avoid the ban on the corporate practice of law) and also maintain "panels" of preferred defense law firms who agree to carefully negotiated rate structures. In contrast, because independent counsel is separate from the insurer, their billing rates will be somewhat higher since they merely must bill the "reasonable" rate for their defense

neg: Liability insurance While the insurer may be indifferent in this scenario as to whether it pays out its policy limits before or after trial, the insured is most certainly not. If the first outcome above were to occur, the insured may be held liable to the plaintiff for a sum far in excess of both the pretrial settlement offer and the policy limits. Then after the insurer pays out its policy limits, the plaintiff may attempt to recover the remaining balance of the judgment by enforcing writs of attachment or execution against the insured's valuable assets. This is where the duty to

neg: Cancellation (insurance) Earned premium will not be returned to the insured if the policy is cancelled. Unearned premium is the portion for an insurance written premium which is considered "unearned" by the insurer. It is the written premium less the earned premium. The unearned premium would be returned to the insured if the policy is canceled using pro rata cancellation method, when the policy is cancelled with no penalty. This is the premium registered on the books of an insurer or a reinsurer at the time a policy is issued and paid for. Cancellation cover applies if you have booked a trip

neg: Total loss Total loss In insurance claims, a total loss or write-off is a situation where the lost value, repair cost or salvage cost of a damaged property exceeds its insured value. Such a loss may be an "actual total loss" or a "constructive total loss". Constructive total loss considers further incidental expenses beyond repair, such as "force majeure". In a total loss, the insurer must indemnify the assured in full, and ownership of the insured item thereby passes to the insurer under the legal process of "subrogation". Although the policy determines the level at which the loss becomes total rather than

neg: South African insurance law insured, the insurer was entitled to be placed in the insured's position in respect of all rights and remedies against other parties which were vested in the insured in relation to the subject-matter of the insurance. In a case such as the present, however, where the insured vehicle was a stolen one, an action instituted by Commercial Union (against a negligent third party who had damaged the vehicle) could be successfully resisted on the basis that Lotter (and thus Commercial Union under its right of subrogation) had no title in the vehicle. Subrogation allows the insured to retain his personal

neg: Marine insurance a policy to the ship-mortgagor.:§§60-63: deals with the issues of a constructive total loss. The insured can, by notice, claim for a constructive total loss with the insurer becoming entitled to the ship or cargo if it should later turn up. (By contrast an "actual total loss" describes the physical destruction of a vessel or cargo.):§79: deals with subrogation, i.e., the rights of the insurer to stand in the shoes of an indemnified insured and recover salvage for his own benefit. Schedule 1 of the Act contains a list of definitions; schedule 2 contains the model policy wording. Marine insurance

neg: Cumis counsel guilty of an intentional tort, which is uninsurable). The "Cumis" decision changed that practice significantly. Now, in California and several other states, an insurer faced with a new tender has three options: (1) deny the tender completely and either risk an immediate bad faith lawsuit by the insured or having to sue the insured first to obtain a judicial declaration of no coverage (a "race to the courthouse"); (2) accept the tender without a reservation of rights and thereby commit to defending the insured to a final judgment (unless the policy is expressly designed so that defense costs "eat away"

neg: Liability insurance the duty to defend and impliedly commits to defending the insured to a final judgment or a settlement regardless of how long it takes (unless the policy expressly provides that defense costs reduce policy limits). In the alternative, the insurer may defend under a reservation of rights: it sends a letter to the insured reserving its rights to immediately withdraw from the insured's defense if it becomes clear there is no coverage or no potential for coverage for the entire complaint, and to recover from the insured any funds expended to that point on defending against any particular claims or

neg: Cumis counsel and 1960s, it became common for U.S. insurers to reflexively issue reservation of rights letters in response to practically every tender of a third party claim by an insured. Under those earlier cases, it was held that if an insurer withdrew a defense after failing to reserve their rights, they could be (and were actually often held to be) liable for all damages suffered by the insured, including damages in excess of the policy's limits of coverage. Therefore, insurers wanted to always reserve their right to withdraw if facts were later discovered precluding coverage (e.g., evidence that the insured was