Law of Nuisance PPT for students

1. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 1
Chapter 19
Chapter 19
Insurance Law
19-1 Insurance Fundamentals
19-2 Property and Casualty
Insurance
19-3 Life and Social Insurance

2. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
19.1 INSURANCE
FUNDAMENTALS
Slide 2
Chapter 19

3. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 3
Chapter 19
WHY HAVE INSURANCE?
 What is Insurance?
 Contractual agreement that protects against loss
 An insurance company agrees to pay money to
help offset a specified type of loss that MIGHT
occur to another party
 This payment is usually set at a minimum
 Not used for frequent, smaller occurrences
 Insurance is only one part of an effective
risk-management program
 Analysis of events that could occur
 Self-insure – use emergency funds

4. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
WHY HAVE INSURANCE?
 When one party pays to compensate for
harm that party is said to indemnify or
make whole the loss to the suffering party
 The party who agrees to indemnify or make
good is the insurer
 The party covered or protected is the
insured
 Beneficiary-the recipient of the amount to
be paid by the insurer
Slide 4
Chapter 19

5. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 5
Chapter 19
WHY HAVE INSURANCE?
 How does insurance work?
 Insurance premiums from the insured are
pooled together
 This pool of money creates the funds for
which to pay any of those insured to cover a
loss

6. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
WHY HAVE INSURANCE?
 Policy –written contract of insurance
 Face Value-the stated maximum amount
that could be paid if the harm a person is
insured against occurs
 Premium-the consideration or payment for a
contract of insurance
 Risk-the potential for loss arising from injury
to or death of a person for damage or
destruction of property from a peril
Slide 6
Chapter 19

7. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 7
Chapter 19
COMMON TYPES OF INSURANCE
 Property Insurance
 Casualty insurance – coverage for a variety of
specific situations in which the intentional,
negligent, or accidental acts of others or mere
chance may result in loss

8. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 8
Chapter 19
COMMON TYPES OF INSURANCE
 Casualty insurance
 Insurance against criminal activity – embezzlement,
larceny, mysterious disappearing
 Auto insurance
 Liability insurance – protected against tort claims
 Accident Health insurance
 Worker’s compensation insurance
 Carried by employers as required by law

9. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 9
Chapter 19
COMMON TYPES OF INSURANCE
 Life insurance
 Term insurance
 1, 5, 10 years – death within term, face value of policy goes to
beneficiary
 No obligation to insured or insurer if term expires
 Whole life insurance (Straight Life)
 Pay premiums throughout life, a portion of premiums go into
savings that can be withdrawn at low interest rates
 At death, face value goes to beneficiary
 Endowment life insurance
 Coverage period of 20 years or until retirement age
 Pay premiums but receive face value at end of term
REGARDLESS of death

10. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 10
Chapter 19
COMMON TYPES OF INSURANCE
 Health Insurance
 Purchased to cover insured and possibly family
 Used to cover ongoing health care expenses,
unexpected illnesses or injuries that are expensive
 Disability Insurance
 Purchased during working years
 Pays benefits if the insured becomes disabled under
the terms of the policy
 Stop paying benefits after a certain number of years
or until age 65

11. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 11
Chapter 19
COMMON TYPES OF INSURANCE
 Social Insurance
 Social Security Act
 Taxpayer-paid premiums to cover unemployment,
disability, poverty, medical problems
 Fidelity and Surety Bonding Insurance
 Covers businesses against financial loss caused by
dishonesty (embezzlement)
 Insures against the failure of one person to perform a
legal obligation to another

12. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 12
Chapter 19
COMMON TYPES OF INSURANCE
 Marine insurance
 loss of damage to vessels, cargo, and other property exposed
to the perils of the sea
 perhaps the oldest type of insurance dating back to ancient
times
 Inland marine insurance
 covers personal property only while it was being transported
anywhere but on the ocean
 today it covers the property wherever it is located whether in
transport or not

13. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 13
Chapter 19
WHAT IS AN INSURABLE INTEREST?
 A person with contractual capacity can acquire insurance
if he or she would suffer loss if the insured property is
damage or destroyed or if insured person is injured or dies
 Insurable interests in property
 A person may not insure property, then sell it, and expect to be
paid if the property is later damage or destroyed
 Insurable interests in life
 Beneficiaries seeking to take out a policy on another person’s life
must demonstrate that they would suffer direct financial loss if
insured died
 Has to show an insurable interest at the time the policy is taken
out

14. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
19.2 PROPERTY AND
CASUALTY INSURANCE
Slide 14
Chapter 19

15. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 15
Chapter 19
Property and Casualty Insurance
 Some overlap between the two
 Exclusions - exceptions in a policy that must be
expressly stated
 Losses due to flood, earthquake, war, terrorism
invasion, rebellion, nuclear disaster, deprecation and
pollutions

16. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 16
Chapter 19
PROPERTY INSURANCE
 Fire insurance-type of insurance that covers the direct loss
to property resulting from fire, lightning strike, or removal
from premises endangered by fire
 Standard fire policy-basic coverage specified by law
 Endorsements to the standard fire policy-Riders to add
coverage
 Proving a loss should be indemnified-3 steps
1. Show that there was an actual fire-glow or flame
2. Fire has to be hostile-(fire started by accident, negligence or a
deliberate act uncontrolled by the insured or friendly fire (a fire
in its intended place that become uncontrollable
3. The hostile fire has be to the nature foreseeable cause of the
loss

17. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
 Coinsurance - a clause in property insurance
that requires the insured to maintain coverage
equal to a certain percentage of the total current
balance of the insured property
Slide 17
Chapter 19
PROPERTY INSURANCE

18. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
 Inland marine insurance-loss to most personal
property while it is being transported across land
or inland waterways
 The transportation mode is not covered
 Personal property floater – protection “floats” with the
property
 Insurance of single pieces of personal property
Slide 18
Chapter 19
PROPERTY INSURANCE

19. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
 Liability insurance - a type of casualty
insurance that indemnifies against personal
injury or property damage claims for which the
insured is legally responsible
 Accidental is covered, not intentional
 Persons engaged in providing personal services
 Malpractice insurance – job-specific type of liability
coverage
Slide 19
Chapter 19
PROPERTY INSURANCE

20. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
Renters Insurance
 Renters insurance protects individuals who
live in a house, mobile home, condominium,
or apartment that is owned by another
person
 Protects against theft, loss of personal
property, loss of use
 Similar to homeowners insurance except that
it does not cover the physical building
Slide 20
Chapter 19

21. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
Property and Renters Insurance
 Take Inventory
 To ensure that you are compensated for any
belongings you lose in a loss you should
inventory all of your personal belongings
 Keep receipts for major items
 Keep documentation in a place other than
your home
Slide 21
Chapter 19

22. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 22
Chapter 19
AUTOMOBILE INSURANCE
 Liability Coverage
 Most common type
 Covers insured if accused of negligent
maintenance, ownership, or use of the vehicle
 Covers bodily injury and death to third parties
 Covers property damage to third parties
 Omnibus clause – covers all members in the
household and any person given permission to
drive vehicle

23. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
Automobile Insurance
 Medical Payments Coverage
 Covers reasonable medical claims of occupants
that are injured in an auto accident
 Covers insured when in an accident in another’s
car
 Also covers insured when, as a pedestrian, a
vehicle strikes them
Slide 23
Chapter 19

24. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
Automobile Insurance
 Collision Coverage
 Optional
 Protects against direct and accidental damage to
the vehicle caused by:
 Colliding with another object
 Overturning the car
 Pays only the actual cash value of the damages
less any deductible
 Each loss, the insured pays up to the amount of the
deductible
Slide 24
Chapter 19

25. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
Automobile Insurance
 Comprehensive Insurance
 Indemnifies against all damages except those
caused by collision or upset
Slide 25
Chapter 19

26. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
Automobile Insurance
 Uninsured Coverage
 Uninsured motorists coverage – allows insured to
collect damages from insurance coverage if the
person who caused them harm is liable for the
accident AND uninsured
 Underinsured Coverage
 Covers insured if negligent driver has insurance
but not sufficient for the damages
Slide 26
Chapter 19

27. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
Automobile Insurance
 No-fault insurance
 Parties to an auto accident be indemnified for
bodily injury by their own insurance company
regardless of who is at fault
 Limits court trials
Slide 27
Chapter 19

28. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
19-3 LIFE, HEALTH, AND
SOCIAL INSURANCE
Slide 28
Chapter 19

29. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 29
Chapter 19
LIFE INSURANCE
 Insurer promises to pay an agreed-upon
amount to a named party upon the death of a
particular person
 Main purpose to make up for lost income the
insured would have provided
 The insurer agrees to pay to a named
beneficiary or to the insured’s estate the face
amount stated in the policy

30. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
LIFE INSURANCE
 Exemptions – excuse the insurer from the
obligation to pay the death benefit
 Death caused by the crash of a private airplane,
an act of terrorism, or during military service
 The insurer is liable for the return of the
premiums paid instead of face value
 Underwriting – the insurance company
examines the prospective insured
 Determine if they will offer the coverage and for
how much
Slide 30
Chapter 19

31. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
LIFE INSURANCE
 Incontestability Clause
 Prohibits the insurer from refusing to perform due
to misrepresentation or fraud after the policy has
been in effect for a specified period of time
 Usually 1-2 years
 Age will never void the policy
 Does not cover suicide before the specified
length of time
Slide 31
Chapter 19

32. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
LIFE INSURANCE
 Grace Period
 Time granted to insured to pay an overdue
premium to keep the policy in force
Slide 32
Chapter 19

33. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
HEALTH INSURANCE
 Hospital Insurance
 Covers expenses incurred while in the hospital
after any applicable deductible and coinsurance
payments are met
 Physician fees, tests, surgical procedures
 Major Medical Insurance
 Pays for a wide variety of medical care for
illnesses
 Prescription drug coverage
 High deductibles, coinsurance, and high max-
benefit limits
Slide 33
Chapter 19

34. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
HEALTH INSURANCE
 Coinsurance
 After the initial required deductible is met, a fixed
portion of additional covered services also has to
be paid by the insured
 Encourages conservation of medical care
Slide 34
Chapter 19

35. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
HEALTH INSURANCE
 Pre-existing conditions
 Illnesses the insured is or should be aware of, or
is being treated for before the policy starts
 State mandated minimum coverage
requirements
Slide 35
Chapter 19

36. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
HEALTH INSURANCE
 Health reform legislation (ObamaCare)
 2010
 Can’t discriminate against dependent children under
19 with pre-existing conditions
 Dependent children can stay on parent’s health plan
until 26
 2014???
 Penalties for employers with 50 or more employees
who do not provide health insurance
 Prohibition on pre-existing conditions for adults
Slide 36
Chapter 19

37. Law for Business and Personal Use
© South-Western, a part of Cengage Learning Slide 37
Chapter 19
SOCIAL INSURANCE
 Retirement insurance
 Eligible persons can begin receiving at retirement
age
 Not enough to make ends meat only on these
checks
 Survivor’s insurance
 Meant for widow or widowers who a) are over 60
and had been married for 10 years b) widow or
widower caring for 16 yrs or younger or disabled
child c) dependent children under 18, dependent
parents over 62

38. Law for Business and Personal Use
© South-Western, a part of Cengage Learning
SOCIAL INSURANCE
 Social security disability insurance
 “prevents the eligible person from being able to
do “any substantial work” for at least one year”
 Government Health Insurance
 For those 65 and older
 Medicare
 Medicaid
Slide 38
Chapter 19