Property and Casualty insurance (P&C) · Life and Health insurance
Insurance is available to help you pay for damage to your property or to pay others on your behalf when you injure someone or damage their property. Insurance is a contract that transfers the risk of financial loss from an individual or business to an insurance company. The company collects small amounts of money from its clients and pools that money together to pay for losses.
Insurance is divided into two major categories: · Property and Casualty insurance (P&C) · Life and Health insurance.
Property and casualty insurance provides protection to businesses and individuals for losses related to their belongings or assets, both physical and financial. Life and health insurance protects people from financial loss due to premature death, sickness or disease. Insurance uses probability and the law of large numbers to determine the cost of insurance premiums it charges its clients based on various risk factors. The rate must be sufficient for the company to pay claims in the future, pay its expenses, and make a reasonable profit, but not so much it turns away customers.
The more likely an event will occur for a given client, the more insurance companies will need to collect to pay the anticipated claims. Insurance companies market their products and services to consumers in different ways. The price companies charge for insurance coverage is subject to government regulation. Insurance companies may not discriminate against applicants or insureds based on a factor that does not directly relate to the chance of a loss occurring. Insurance contracts are designed to meet specific needs and thus have many features not found in many other types of contracts. Since insurance policies are standard forms, they feature boilerplate language which is similar across a wide variety of different types of insurance policies. The insurance policy is generally an integrated contract, meaning that it includes all forms associated with the agreement between the insured and insurer. e issuance of a written policy can occur.
In some cases, however, supplementary writings such as letters sent after the final agreement can make the insurance policy a non-integrated contract. One insurance textbook states that generally “courts consider all prior negotiations or agreements … every contractual term in the policy at the time of delivery, as well as those written afterward as policy riders and endorsements … with both parties’ consent, are part of the written policy”. The textbook also states that the policy must refer to all papers which are part of the policy. Oral agreements are subject to the parole evidence rule, and may not be considered part of the policy if the contract appears to be whole. Advertising materials and circulars are typically not part of a policy. Oral contracts pending The insurance contract or agreement is a contract whereby the insurer promises to pay benefits to the insured or on their behalf to a third party if certain defined events occur. Subject to the “fortuity principle”, the event must be uncertain. The uncertainty can be either as to when the event will happen (e.g. in a life insurance policy, the time of the insured’s death is uncertain) or as to if it will happen at all (e.g. in a fire insurance policy, whether or not a fire will occur at all). Insurance contracts are generally considered contracts of adhesion because the insurer draws up the contract and the insured has little or no ability to make material changes to it. This is interpreted to mean that the insurer bears the burden if there is any ambiguity in any terms of the contract. Insurance policies are sold without the policyholder even seeing a copy of the contract. In 1970 Robert Keeton suggested that many courts were actually applying ‘reasonable expectations’ rather than interpreting ambiguities, which he called the ‘reasonable expectations doctrine’.