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Insurance law 101
The document provides an overview of insurance law, defining insurance as a contract where the insurer assumes risk in exchange for a premium. It discusses various types of insurance, including auto, health, property, life, and business, as well as the distinctions between first-party and third-party insurance. Additionally, it outlines the regulatory framework in Texas and the essential elements of an insurance policy, including claims handling and the rights of the insured.
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Insurance law 101
- 1. Insurance Law 101 Stewart K. Schmella McCormick, Lanza & McNeel, LLP December 3, 2014
- 2. What is Insurance? An insurance policy is a contract in which a promise is conditioned upon the happening of a fortuitous event, an event of chance. In an insurance arrangement, the insurer assumes the risk specified in a policy in exchange for a premium paid by an insured. In re Texas Ass’n of School Boards, Inc., 169 S.W.3d 653, 658-59 (Tex. 2005). Insurance Law 101 12/3/2014 2
- 3. Insurance vs. Gambling:Insurable Interest Purpose: Discourage use of insurance for illegitimate purposes. No insurable interest? No right to recover under policy. Insurance Law 101 12/3/2014 3
- 4. Different Types ofInsurance: Auto Liability Collision Comprehensive Underinsured Motorist Insurance Law 101 12/3/2014 4
- 5. Different Types ofInsurance: Health Medical Vision Dental Insurance Law 101 12/3/2014 5
- 6. Different Types ofInsurance: Property Homeowners Renters Flood Valuable Personal Property Art Insurance Law 101 12/3/2014 6
- 7. Different Types ofInsurance: Life Term Life Whole Life Accidental Death and Dismemberment (AD&D) Short Term Disability Long Term Disability Insurance Law 101 12/3/2014 7
- 8. Different Types ofInsurance: Business Commercial General Liability (CGL) Business Auto Builder’s Risk Employee Practices Errors and Omissions Directors and Officers Workers’ Compensation Insurance Law 101 12/3/2014 8
- 9. First Party Insurance The insured suffers loss directly. . Insurance Law 101 12/3/2014 9
- 10. Third Party Insurance Other persons (not the insured) sustain losses for which the insured may be legally responsible. Claims-made vs. occurrence-based. Duty to defend vs. duty to indemnify. Insurance Law 101 12/3/2014 10
- 11. Insurance Law: ThreeBroad Categories Regulation of the business of insurance Regulation of insurance policies Regulation of claims handling practices Texas Commissioner of Insurance Julia Rathgeber Insurance Law 101 12/3/2014 11
- 12. Texas Department ofInsurance Licensing Compliance and enforcement Financial regulation Insurance fraud Advertising Technical Analysis Workers’ Compensation Insurance Law 101 12/3/2014 12
- 13. The Insurance Policy Elements: Declarations Coverage Agreement Definitions Conditions Exclusions Endorsements Insurance Law 101 12/3/2014 13
- 14. Claims Handling The“special relationship.” Insurer’s duty of good faith: settle claim when the insurer’s liability is reasonably clear. The insurer must conduct a reasonable and timely claims investigation. Insurance Law 101 12/3/2014 14
- 15. Insured’s Remedies Breachof contract Violations of Texas Insurance Code Violations of DTPA The insured can recover damages, attorney’s fees, and statutory interest Insurance Law 101 12/3/2014 15
- 16. Moral hazard problem Do insureds behave differently because they have insurance? Solutions: make the insured share the risk. Deductibles Co-pays Rate increases Insurance Law 101 12/3/2014 16
- 17. Questions? Stewart K.Schmella McCormick, Lanza & McNeel, LLP 4950 Bissonnet Bellaire, Texas 77401 713-523-0400 sschmella@mlm-lawfirm.com http://www.mlm-lawfirm.com Insurance Law 101 12/3/2014 17
Editor's Notes
- #4 Property: The insured derives pecuniary benefit or advantage by the preservation or continued existence of the property or would sustain pecuniary loss from its destruction. Valdez v. Colonial Cty. Mut. Ins. Co., 994 S.W.2d 910, 914 (Tex.App.—Austin 1999, pet denied). Life: (1) A close relative that wants the insured to live irrespective of money; (2) a creditor; and (3) one having a reasonable expectation of pecuniary benefit or advantage from the continued life of another. Stillwagoner v. Travelers Ins. Co., 979 S.W.2d 354, 359 (Tex.App.—Tyler 1998, no pet.).