Insurance Law Overview

Insurance Law

• Broker: A licensed professional who acts as an intermediary between insurance clients (individuals or businesses) and insurance companies.

• Contra Proferentem Rule: If a contract term (e.g., an insurance policy) has multiple interpretations, the court interprets it against the party who wrote the contract (typically the insurer).

• Property Insurance: Provides financial protection against risks or damage to physical assets (buildings, personal property, business equipment). It covers losses due to events like fire, theft, vandalism, or natural disasters. It often includes a co-insurance clause requiring the insured to bear some risk of loss (a deductible). If multiple policies cover the same property, insurers will contribute to compensating the insured but cannot pay out more than the total loss ("contribution").

Business Interruption Insurance

• Covers lost profits and added expenses for a business affected by production halts (e.g., fire, natural disasters, insurance claims).

Life and Health Insurance

• A contract where an insurer promises to pay a beneficiary a sum of money (death benefit) upon the death of the insured. The insured pays regular premiums in exchange. Insurable interest is required, meaning the policyholder must have a financial, emotional, or other beneficial relationship with the insured.

Liability Insurance

• Protects against claims for harm or injuries caused by a business to others.

Fidelity Bond

• Protects businesses against losses from fraudulent or dishonest employee acts (e.g. theft, embezzlement, forgery).

Surety Bond

• A third party (surety) guarantees the performance or obligations of another party (principal) to a third party (obligee).

Contract Law

• Elements of a Contract:

  • Consensus: Offer and acceptance
  • Offer: Clear proposal to enter a contract (certain, complete, communicated)
  • Acceptance: Unqualified agreement to the offer -**Consideration:**Value exchanged between parties
  • Capacity: Legal ability to enter into a contract
  • Legality of Purpose: The contract must have a lawful objective

• Certainty of Terms: Specific terms to avoid ambiguity in contracts, ensuring enforceability.

• Standard Form Agreement: Contracts with pre-set terms, usually set by one party (offeror), and the other party (offeree) has limited or no negotiation power.

• When is a contract formed? When the offer is accepted (received by the offeror) and the agreement is clear.

• Three things needed for acceptance: Positive form (not silence), unconditional, and communicated.

• Requirements of Writing: Certain contracts must be in writing to be enforceable. The Statute of Frauds governs this, requiring certain types of contracts to be in writing (e.g., contracts for longer than a year, land purchases, guarantees).

Intentional Torts

• Tort: A civil wrong (not a breach of contract) that causes harm or injury to another person. Compensation is sought through a lawsuit.

• Types of Harm: Personal injury, property damage, emotional distress, and financial loss.

• Fidelity Bond: Protects companies against financial losses caused by dishonest employees.

Tortfeasor

• The wrongdoer in a tort case. Tort cases are civil disagreements.

Intentional Torts (cont.)

• Fault: Wrongful act, negligence, or strict liability.

• Causation: Direct link between the defendant's actions and harm.

• Compensable Injury: Recognizable harm, such as physical, emotional, or financial harm

Intentional Torts (Cont.)

• Trespass to the person: Assault, battery, false imprisonment.

• Trespass to Land: Unlawful entry onto another's property.

• Conversion: Unauthorized taking or use of another's personal property.

• Defamation: Injury to reputation. Libel (written) or slander (spoken).

• Private Nuisance: Unlawful interference with another's use of their property.

• False Imprisonment: Taking someone against their will.

Unintentional Torts

• Negligence: Failure to exercise the care expected of a reasonable person, causing harm.

• Four Key Ingredients for Negligence: Duty of Care, standard of care, breach of duty, and causation.

• Duty of Care: Legal obligation

• Breach of duty: Conduct considered below the standard of a reasonably careful person in similar circumstances

• Causation: Direct link between the breach and the injury.

• Damages: Financial compensation to the victim.

• Physical Causation Test: Was the harm caused by the defendant's actions?

• Remoteness Test: Was the harm of such a nature to have been foreseeable?

• Thin Skull Rule: Defendant is liable for any unique vulnerabilities of the plaintiff even if they did not anticipate them.

• Negligent Misrepresentation: providing false, inaccurate or misleading information, without taking reasonable care in verifying its accuracy.

• Defences of Negligence: Contributory Negligence-plaintiff's own contributions to injury, Professional Liability.

Contract Law

• Ways to Terminate an Offer: Lapse of time, revocation, rejection, counteroffer.

Insurance Law

• Subrogation: Insurance company's right to pursue a third party responsible for the insured loss.

• Salvage: Remaining value of damaged property after a loss.

• Forfeiture Rule: Insured loses policy benefits due to actions that breach contract terms or are considered unlawful.

Insurance Law

• Insurable Interest: Financial or emotional stake in the subject of insurance, necessary for a valid policy.

• Utmost Good Faith: Both parties must disclose all relevant information truthfully and fully in an insurance contract.

• Misrepresentation: False, incorrect or incomplete information during the application or renewal process.

This quiz explores essential concepts in Insurance Law, including the roles of brokers, the contra proferentem rule, and property insurance. It also covers business interruption insurance and its implications for financial protection and risk management. Test your understanding of these critical insurance principles.