Chapter 27 introduces you to insurance law. The learning objectives for this chapter include: Explain contractual relationship between insurer and insured; learn how to interpret policy clauses; understand insurance terminology and concepts: subrogation, insurable interest, coinsurance, bad faith, duty to defend; identify types of liability insurance. | Property Personal Property and Bailments Real Property Landlord and Tenant Estates and Trusts Insurance Law 5 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Insurance Law P A E T R H C 27 “If anything can go wrong, it will.” Anonymous (1950s), known as Murphy’s Law What if this guy were your employee and lost confidential documents from his briefcase that were taken by a competitor or thief? This guy needs to wake up! Learning Objectives Insurance policies as contracts Property insurance Liability insurance Bad faith breach of insurance contract 27 - In an insurance agreement, the party who risks a particular loss (insured) transfers that risk – along with consideration (premium) – to another party (insurer) which bears the financial consequences if the particular risk (perils) materializes as an actual event Person to whom insurance proceeds are payable is the beneficiary Overview 27 - Except for life insurance, the insured . | Property Personal Property and Bailments Real Property Landlord and Tenant Estates and Trusts Insurance Law 5 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Insurance Law P A E T R H C 27 “If anything can go wrong, it will.” Anonymous (1950s), known as Murphy’s Law What if this guy were your employee and lost confidential documents from his briefcase that were taken by a competitor or thief? This guy needs to wake up! Learning Objectives Insurance policies as contracts Property insurance Liability insurance Bad faith breach of insurance contract 27 - In an insurance agreement, the party who risks a particular loss (insured) transfers that risk – along with consideration (premium) – to another party (insurer) which bears the financial consequences if the particular risk (perils) materializes as an actual event Person to whom insurance proceeds are payable is the beneficiary Overview 27 - Except for life insurance, the insured and the beneficiary generally are the same Insurance policies must satisfy all of the elements required for a binding contract Insured’s misrepresentation, if relied on by the insurer, renders the contract voidable If a dispute arises over policy language, courts interpret provisions as an average person would understand them and construe ambiguities against the insurer See Property Owners Insurance Co. v. Cope Specifics of Insurance 27 - Binding contract: Person makes application (offer) to insurance company for insurance coverage If the insurance company accepts the offer, an insurance contract arises Insured’s initial premium payment and future premium payments furnish consideration for the insurer’s promises of coverage Applicants for insurance have a duty to disclose all material facts about the risk so an insurer may make an intelligent decision about whether to accept the risk State law governs whether insurance contracts are covered by the statute of frauds Once written, the
