Textbook Note - Chapter 28.pdf

4 Pages
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Department
Management and Organizational Studies
Course Code
Management and Organizational Studies 2275A/B
Professor
Philip King

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Description
Insurance Introduction Insurance Policy: A contract of insurance. Insurer: A company that sells insurance coverage. Promises to compensate the person or business. Insured: One who buys insurance coverage. Premium: The price paid for insurance coverage. Insurance legislation serves a number of significant purposes, including the following: Mandating the terms that must be found in insurance contracts. Regulating the insurance industry generally by setting out licensing requirements for insurance companies, insurance brokers, and insurance adjusters. Putting in place a system for monitoring insurance companies, particularly with respect to their financial operation. The three basic kings of insurance are as follows: Life and disability insurance provides payments on the death or disability of the insured. Property insurance (also known as fire insurance) provides payment when property of the insured is damaged or destroyed through accidents. It also can cover the costs of machine breakdown. Liability insurance (also known as casualty insurance) provides payment in circumstances where the insured is held legally responsible for causing loss or damage to another, known as the third party. Insurance policies can be written so that the insured pays a Deductible. Deductible: The part of a loss for which the insured is responsible. The Insurance Contract Duty to Disclose: The obligation of the insured to provide to the insurer all information that relates to the risk being insured. Insurance contracts are of a special nature. Known as contracts of "utmost good faith". Insurable Interest The special nature of the insurance contract also means that its validity is contingent on the insured having an Insurable interest in the thing insured. Insurable Interest: A financial stake in what is being insured. Indemnity With the exception of life insurance contracts, insurance contracts are contracts of Indemnity. Indemnity: The obligation on the insurer to make good the loss. The insured is not meant to profit from the happening of the insured-against event, but at most will come out even. See Pg. 712 for the Example of the Application of a Coinsurance Clause Subrogation The insurer also has what is called a right of Subrogation. Subrogation: The right of the insurer to recover the amount paid on a claim from a third party that caused the loss. Forfeiture Rule: A rule that provides that a criminal should not be permitted to profit from a crime. The Policy Rider: A clause altering or adding coverage to a standard insurance policy. Endorsement: Written evidence of a change to an existing insurance policy. For Example: The standard fire policy excludes coverage when the insured building has been left unoccupied for more than 30 consecutive days. Insurance Products Some Policies put in place by WEC (The "company" from Ch. 28) Auto Insurance An automobile driver is required by law to have insurance for liability arising from its ownership, use, and operation. Collision Coverage Coverage against liability for the injury or death of someone else (third-party liability) Provides benefits to the insured for the injury or death. Compensation for loss or damage to the insured automobile itself. Third-Party Liability insurance Required by law Each Province specifies through legislation the minimum amount of coverage an owner must obtain: Example: Ontario, the statutory minimum is $200,000. Employees injured in car accidents on the job may have coverage through workers'
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