Business Law II
Chapter 19
INSURANCE LAW– GOTCHA COVERED
1.
2.
____________________ – written agreement made with an insurance company. In
return for payment on the insurance, company agrees to pay you if
_________________________________ occurs. Purchased in an attempt to avoid
having to make large, unexpected payments when accident or illness occurs.
a.
____________________ – the written agreement; provides maximum dollar
amount for which company is liable
b.
____________________ – the potential for loss arising from injury to or death
of a person or from damage or destruction of property from a specified peril
c.
____________________ – payment made for insurance coverage (usually paid
monthly, semiannually, or annually); increases in cost as amount of coverage
increases
d.
____________________ interest – purchaser of insurance must be able to
prove they would suffer ____________________ if the insured property or
person is injured or dies
1)
In ____________________, anyone who would suffer a direct and
measurable ____________________ loss can insure the property
2)
In _____________, one must demonstrate there is a _______________
_________________ they would suffer direct financial loss. Creditors
may insure their debtors, businesses may insure
__________________________, spouses may insure one another, etc.
Common Types of Insurance
a.
____________________ Insurance – pays ____________________ a set
amount upon the death of a specified person
1)
____________________ Insurance – written for a certain number of
years. Beneficiary receives face value if insured dies within the policy
term. If term ends before death of insured, there is no obligation to pay.
____________________ insurance is the least expensive….as the policy
gets older, it pays less in a claim.
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2)
____________________ Life Insurance – AKA as ordinary or straight life
insurance. Requires constant premium payments for life of insured or
until age 100. Portion goes into savings program against which insured
can borrow.
3)
____________________ Life Insurance – time typically runs until
retirement age. Beneficiary receives face value if insured dies during
term. If insured lives to end of term, policy owner is paid (endowed)
with face value of policy.
4)
____________________ – typically excuse insurer from obligation to pay
death benefit under certain situations (death caused in crash of private
plane, terrorism, military service, etc.)
5)
____________________ Clause – Prohibits insurer from refusing to
perform due to misrepresentation or fraud after policy has been in effect
(often one or two years).
6)
____________________ Period – Time in which overdue premium can
still be paid and keep policy in effect.
7)
________________________________ – Provision can be added
requiring insurer to pay twice the face amount if death is accidental.
____________________ Insurance – Coverage for loss or
damage due to fire and smoke.
1)
____________________ fire policy covers direct loss
resulting from fire, lightning strike or removal of
items from premises endangered by fire
2)
____________________ – AKA ____________________; attached to
standard policy to extend coverage and make it unnecessary to
determine how much damage comes from one type of event over
another (windstorm, hail, explosion, riot, etc.)
3)
Proving loss is three-fold:
a)
There was an ____________________ fire.
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4)
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b)
Actual fire was ____________________. (Started by accident,
negligence or deliberate act uncontrolled by insured; or friendly
fire that becomes uncontrollable.
c)
Fire was the ________________________________ —natural and
forseeable cause of the loss.
____________________ – clause that requires insured to maintain
coverage equal to a certain percentage of total current value of
property.
____________________ Insurance – Coverage for situations which may be
intentional, negligent, or accidental acts of others as well as mere chance.
1)
Insurance against ____________________ activity –
embezzlement, burglary, fraud, etc.
2)
____________________ insurance – indemnifies for
losses arising from ownership and operation of motor
vehicles
a)
____________________ coverage – covers insured when accused
of negligent ownership, maintenance, or use of a motor vehicle.
(1)
Extends to borrowed cars (with owner’s permission) and
when insured has loaned his/her car to another.
(2)
Pays for bodily injury/death of third parties and damage to
property of third parties
b)
_________________________________________ coverage – pays
for medical claims of occupants of insured’s vehicle who are
injured. Also covers insured when in another’s vehicle; also
while walking, bike riding, etc.
c)
____________________ insurance – provides coverage for
insured’s own vehicle when colliding with another object or
overturning.
d)
____________________ insurance – indemnifies against all other
damage (fire, theft, water, vandalism, hail and glass breakage).
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e)
____________________ motorists coverage – allows insured to
collect from own insurance when person causing the damage has
no insurance.
f)
____________________ motorists coverage – compensates
insured when negligent driver does not have sufficient coverage.
g)
____________________ insurance – some states require parties
involved in an accident to be covered by their own insurance
company, regardless of who was at fault. (If medical claims
exceed set amount, injured party can sue.)
h)
____________________ clause – extends auto insurance coverage
to members of the insured’s household.
i)
Reading the numbers:
(1)
3)
4)
d.
50/100/50
= bodily injury $50,000 per ____________________
= bodily injury $100,000 per ____________________
= ____________________ damage $50,000
____________________ insurance – provides protection against claims
from those who are injured as a result of negligence or other torts
committed by the insured.
a)
Is a major part of auto insurance (____________________ ) as well
as homeowner’s and renter’s insurance.
b)
Personal service providers such as beauticians are wise to carry
liability insurance.
c)
____________________ insurance is another type of
liability coverage – protects ____________________
(doctors, lawyers, etc.) against malpractice claims
brought by patients/clients.
____________________, ____________________, or
____________________ insurance – provide coverage for hospital bills
and loss of income resulting from accident or illness
____________________ Insurance – provisions of the Social Security Act and
others
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1)
____________________ Insurance – eligible person can begin receiving
Social Security retirement insurance as early as age 62. Those born in
1960 or after cannot collect until age 67.
2)
____________________ Insurance – widow, widower, and dependent
children can receive benefits
3)
____________________ Insurance – must establish that the condition is
physical/mental and expected to continue indefinitely or result in death.
4)
Health Insurance (____________________) – provides two basic
programs
a)
Hospital insurance to pay for hospitalization and follow-up
treatment
b)
Medical insurance to pay for physician services, ambulance, etc.
e.
____________________ Insurance – protects against loss of or damage to
vessels, cargo and other property exposed to sea perils. (oldest type of
insurance)
f.
_________________________ Insurance – originally covered personal
property while being transported anywhere but on the ocean, as across land
or inland waterways.
g.
1)
Now designed to cover whether in transport or not, but the carrier (car,
plane, train, is not covered)
2)
______________________________ was added – covers any and all of
insured’s personal property against almost any peril regardless of
location.
3)
Term ____________________ means that the protection floats with or
follows the property.
____________________ Insurance – purchased to provide protection from
loss when homes are damaged
1)
Covers damage from fire, vandalism, theft, etc.
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2)
Also protects from loss due to ____________________ (i.e. wind and
lightning; some areas will also provide earthquake and flood insurance
at additional rates)
3)
Includes ____________________ insurance – protects you if someone is
injured while on your property, even if you are careless
4)
____________________ insurance is similar coverage, for those who do
not own their property (protects contents of house or apartment;
includes liability insurance)
h.
____________________ and ____________________________ Insurance –
provides protection against financial loss caused by dishonesty.
i.
____________________ Insurance – covers ____________________ expenses
from _________________________________
1)
May ____________________ certain illnesses or types of treatment
2)
Many ____________________ provide some coverage
3)
____________________ – those kinds of expenses which are paid
a)
Some provide hospital costs, doctor bills, special expenses like
ambulance service, etc.
b)
Some pay to the policy holder an amount of money for each day
of illness or injury
Insurer of ______________________________ – Lloyd’s of London
a.
Famous for insuring _________________________, such as
dancers’ legs, pianists’ fingers, etc.
b.
At one time, there was nothing they wouldn’t cover.
Insurance industry is spreading out into an even broader range of coverage areas –
____________________ insurance, ____________________
insurance, ____________________ insurance,
____________________ insurance,
___________________________________ insurance, etc.